After easing to a six-month low in September, India’s services sector expanded in October as new business continued to increase on higher demand despite acceleration in inflation, a survey showed.
The seasonally adjusted S&P Global India Services Purchasing Managers’ Index (PMI) improved to 55.1 in October from 54.3 in September.
The headline figure was above the neutral 50 threshold for the fifteenth month running and outpaced its long-run average.
The services PMI is compiled by S&P Global from responses to questionnaires sent to around 400 service sector companies.
The survey October data showed an expansion in new work placed with Indian service providers, continuing the trend seen since August 2021. Moreover, the pace of growth was marked and accelerated from September, the survey showed.
The domestic market was the main source of new business gains, as foreign sales decreased further at the start of the third fiscal quarter. The deterioration in the monthly international demand has been registered since the onset of COVID-19 in March 2020.
Pollyanna De Lima, economics associate director, S&P Global Market Intelligence, said, “The October results show us that service providers had no trouble securing new work in October, despite lifting their charges again. Hence, the sector remained firmly inside expansion territory as business activity and payroll numbers were raised to support strengthening demand.”
The survey showed that the domestic services companies reported greater operating expenses in October, stretching the current sequence of inflation to 28 months. The latest increase was the most pronounced since July and historically marked.
Many companies indicated that higher food, fuel and retail prices pushed up their overall expenses in October, Di Lima added.
It said that the ongoing increases in new business and output requirements continued to support job creation in the service economy in the month, with employment rising for the fifth month in a row and at the second-fastest pace in over three years.
“Optimism towards a more positive environment boosted job creation in October, as service providers sought to adjust capacities to accommodate for expected increases in new work. Sentiment towards the year-ahead outlook for business activity improved to the highest in close to eight years,” De Lima said.
The country’s Manufacturing Purchasing Managers’ Index (PMI) rose to 55.3 in October from 55.1 in September.
With this, the country’s Composite PMI Output Index expanded to 55.5 in October from 55.1 in September.
The survey said that there was a mild acceleration in growth of private sector activity in India, as a stronger increase in the service economy more than offset a slowdown among goods producers.