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Business News/ Economy / India's services sector PMI hits 61, reflecting strong sales growth
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India's services sector PMI hits 61, reflecting strong sales growth

India’s services PMI has held firm in the expansion zone every month since August 2021, its longest such stretch since August 2011

India's services sector PMI hits 61, reflecting strong sales growth. Photo: BloombergPremium
India's services sector PMI hits 61, reflecting strong sales growth. Photo: Bloomberg

New Delhi: India’s services sector growth strengthened further in September, recording robust sales performances due to surging demand and subsequent increase in sales and output, a private survey said.

The S&P Global India services Purchasing Managers’ Index (PMI) stood at 61 in September, up from 60.1 in August. The figure stood at 62.3 in July, 58.5 in June and 61.2 in May.

A reading above 50 hits an expansion in activity, while a number below suggests a contraction.

India’s services PMI has held firm in the expansion zone every month since August 2021, its longest such stretch since August 2011.

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

"Moreover, an upturn in business optimism about the year ahead, fuelled by buoyant demand conditions, bode well to further growth across the service sector," she added.

India’s services sector, one of the fastest growing in the world, contributes to over 50% of the country’s GDP.

According to S&P, Indian firms noted an upturn in demand from abroad, particularly from clients based in Asia, Europe and North America.

However, the overall rate of growth was one of the quickest seen in the series history (since September 2014), despite slowing to a three-month low, S&P said in the survey.

“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," it added.

The S&P Global India Services PMI is compiled from responses to questionnaires sent to about 400 service sector companies.

The survey said that the input cost inflation retreated substantially in September with the rate of increase equal to its long-run average and one of the weakest since late-2010.

“Some firms opted to pass on to their clients additional cost increases by raising selling prices. At the same time, others suggested that charges were left unchanged amid attempts to secure new customers," the survey said.

“The overall rate of charge inflation was solid, though the softest in six months," it added.

The PMI data is an indicator of the health of the economy.

According to government data, the Indian economy expanded by 7.8% in the first quarter of the current fiscal year on higher government and private capital expenditure, and strong services growth. India’s GDP recorded a growth of 6.1% in the January to March 2023 quarter, pushing the annual growth (for FY23) to 7.2% from 7% estimated earlier.

On 3 September, S&P Global released its survey on India’s purchasing managers’ index (PMI) for manufacturing for August, which grew at the slowest pace in five months at 57.5 after new factory orders softened from their high in September.

The composite PMI, consisting of both the manufacturing and services indices, rose to 61 in September from 60.9 in August on the back of higher sales in services.

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ABOUT THE AUTHOR
Rhik Kundu
Rhik writes about the Indian economy and its crucial indicators. He is constantly navigating corporates, decoding policies, and dabbling with everything in between.
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Published: 05 Oct 2023, 12:34 PM IST
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