Indian services activity returns to growth

Wednesday 11th October 2017 05:53 EDT

A monthly survey said that activity of the services sector in India expanded for the first time in three months in September as it rebounded from GST-related contractions, driven by a surge in new business orders that supported job creation. The Nikkei India Services PMI Business Activity Index rose to 50.7 in September, from 47.5 in August. It found out that the combination of marketing campaigns by companies and strengthening demand conditions led to new business growth in September.

The latest services PMI follows the manufacturing one announced last week which showed that industrial activity registered the second straight month of expansion in September. Economist at IHS Markit, and author of the report, Aashna Dodhia said, “The Indian private sector regained some lost ground since the implementation of July's GST as service providers, followed the manufacturing industry back to growth.” The improving economic environment supported job creation, with services employment increasing at the fastest rate in almost six-and-a-half years. “The labour market was strengthened over the month as the pace of job creation quickened to the fastest since mid-2011, led by the transport and storage and consumer services sub-sectors,” Dodhia said.

Input cost accelerated in September, on the inflation front, while output charges rose at the weakest rate since June. The survey further noted that service providers remained optimistic towards growth prospects over the coming 12 months, but their confidence dropped to a three-month low at the end of the third quarter. Dodhia, however, noted that the composite PMI for the July-September quarter indicated the lowest average since October-December 2013 “as the private sector transitions from recent structural shocks.”

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