January services PMI at 19-month high of 54.3

NEW DELHI: Buoyed by a rise in incoming new work, strengthening underlying demand and improved weather conditions, India's service sector output touched a 19-month high in January with the seasonally adjusted Nikkei Services Business Activity Index climbing to 54.3 compared with 53.6 in December.

The spurt in service output growth is another set of positive news at the start of the year for the economy since manufacturing also rose in January as showed by the Nikkei India Manufacturing Purchasing Managers' Index which was a 4 month high of 51.1.

A reading above 50 on this survey-based index shows expansion, while a figure below that indicates contraction.

Growth was noted in four of the six monitored categories, the exceptions being Hotels & Restaurants and Transport & Storage.

The overall the composite PMI output index jumped to an 11 month high of 53.3 compared with 51.6 in December. Lifting the index were a rebound in manufacturing production as well as stronger growth of services output.

“A strong upturn in new business is an especially positive note from January’s survey, which underpins hopes for further growth of activity across the country’s private sector in the near-term. Moreover, this upswing in demand may boost the labour market and help end the long run of subdued employment trends," said Pollyanna De Lima, economist at Markit, which compiles the survey.

Amid forecasts of further improvements in demand and favourable government policies, service providers in India expect output to continue to increase over the course of the next year.