Financial Services News

Services PMI signals September boost

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| Photo Credit: Reuters

India’s services sector activity gained momentum in September, with new orders rising at the second fastest rate since June 2010, as per the S&P Global India Services Purchasing Managers’ Index (PMI), which moved up to 61 from 60.1 in August. 

A reading of over 50 on the index indicates an expansion in activity levels and September’s number, albeit slightly lower than the 13-year high of 62.3 in July, still indicated one of the strongest upticks in output in 13 years.   

With the rise in input costs retreating substantially to one of the lowest levels since late 2010, Services players raised prices at the slowest pace in six months, and exuded the highest positive sentiments about business prospects a year ahead, in nine years. 

“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 was moderate, but above its long-run average,” the firm said. 

Growth in new international orders slowed to a three-month low, yet was one of the quickest since September 2014, S&P Global Market Intelligence said, citing the Survey-based findings that are factored into the PMI. Demand grew from clients in Asia, Europe and North America, as per survey participants. 

The Services PMI has averaged 61.1 over the second quarter, slightly higher than the April to June average of 60.6. 

“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,” said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence. 

“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,” she averred. Improved optimism and buoyant demand conditions augur well for further growth in the sector, Ms. De Lima underlined.    

The Services PMI, read together with the Manufacturing PMI which eased to a five-month low of 57.5 in September with new orders slowing down, India’s private sector recorded the second sharpest increase in aggregate new business for over 13 years. The S&P Global India Composite PMI Output Index was up from 60.9 in August to 61 in September, indicating one of the strongest rates of expansion in just under 13 years, the firm added.

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