The services sector in India in India grew to a 13-year high in September, thanks to a large increase in new business amid robust demand conditions.
As per a monthly survey released on Thursday, the seasonally adjusted S&P Global India Services PMI Business Activity Index increased from 60.1 in August to 61 in September, indicating a significant increase in output.
A Purchasing Managers’ Index (PMI) score above 50 indicates expansion while a score below 50 indicates recession.
The survey is based on replies to questionnaires distributed to a panel of around 400 service sector companies.
The most recent data shows a significant increase in new business placed with Indian service providers, the second-fastest since June 2010.
Aside from an increase in total sales, companies reported an increase in demand from abroad, particularly from clients in Asia, Europe, and North America.
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, stated, “The latest PMI results brought more positive news for India’s service economy, with September seeing business activity and new work intakes rising to one of the greatest extent in over 13 years”.
According to the survey, confidence in the prognosis has increased, with survey participants anticipating good market dynamics and buoyant demand for the coming year.
The degree of optimism was at its greatest in over nine years. An upturn in company optimism for the coming year, fuelled by strong demand, bodes well for future expansion in the service sector. As the business mood improved, job creation remained stable.
“Services charges rose at a softer rate as cost pressures receded to one of the lowest in two-and-a-half years. Although the latter indicates that near-term output price inflation may cool, worries about potential fluctuations in food prices due to El Niño means the RBI is highly unlikely to cut rates until early next year”, Lima added.
The three-day meeting of the RBI governor-led six-member Monetary Policy Committee (MPC) began on Wednesday. Governor Shaktikanta Das will make the announcement on Friday (October 6).
In the meantime, the S&P Global India Composite PMI Output Index increased from 60.9 in August to 61 in September.
As per the survey, robust demand for Indian goods and services drove the second-sharpest growth in aggregate new business in more than 13 years in September.
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