 "Services sector in Sept sees strongest output in 13 years; PMI rises to 61")
The services sector growth strengthened in September with the Purchasing Managers' Index (PMI) tally rising from 60.1 in August to 61.0 in September, signalling one of the strongest upturn in aggregate new business in over 13 years, the survey by credit rating agency S&P Global showed on Thursday.
“The latest data showed a substantial increase in new business placed with Indian service providers, one that was the second-fastest since June 2010. Anecdotal evidence indicated that market dynamics remained favourable, supporting demand. Advertising was also cited as a key factor boosting sales,” the survey said.
In PMI parlance, a reading above 50 indicates expansion of services activity, while one below that suggests contraction.
On the price front, it said that input cost inflation retreated substantially in September. Panellists — the survey respondents — reported paying more for chicken, rice, vegetables, transportation, and staff costs. “The level of positive sentiment was at its highest in over nine years.”
“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 extents in over 13 years. Besides demand strength domestically, firms noted higher international sales to Asia, Europe and North America,” said Pollyanna De Lima, economics associate director, S&P Global Market Intelligence.
Lima also said that receding cost pressures indicated that although the near-term output price inflation may cool, worries about potential fluctuations in food prices due to El Niño meant the RBI was highly unlikely to cut rates until early next year.
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The survey also said that job numbers continued to increase at a historically high rate, with workloads rising and capacities experiencing mild pressure.
“Additional staff were recruited to aid firms' efforts to keep on top of current workloads and in anticipation of further growth in the coming months. The overall pace of job creation, above its long-run average,” the survey found.
It said that the rates of input price inflation easing at goods producers and services firms, led to the second-slowest increase in aggregate costs for three years.
Some firms opted to pass on additional cost increases to their clients by raising selling prices, while others kept the charges unchanged to secure new customers. “The overall rate of charge inflation was solid, though the softest in six months,” the survey said.
However, while services firms noted a quicker increase in sales, manufacturers saw a slowdown, the survey found.
The S&P Global India Services PMI compiles responses from a panel of around 400 service sector companies including consumer (excluding retail), transport, information, communication, finance, insurance, real estate and business services.