October services PMI at four-month high

India’s services activity rose to a four-month high in October on the back of stronger demand, a private survey showed. The Nikkei India Services Purchasing Managers’ Index (PMI) rose to 51.7 in October, the highest since June, from 50.7 in September.

This is the second month of expansion in services activity — a reading in excess of 50 on the survey-based index reflects growth. The survey is compiled by IHS Markit.

“The recovery from the implementation of the goods and services tax ( GST) in July was sustained in the private sector in October, mainly radiating from service providers as growth in manufacturing was relatively subdued,” said IHS Markit economist Aashna Dodhia.

The new business sub-index rose to 51.5 in October from 51.1 in September, the fastest expansion since June. Firms raised prices following an increase in input costs at the joint-fastest pace since April 2016.

“In response to greater output requirements, service providers raised their staffing levels for the second month in succession,” the survey said but the rate of job creation slowed from the preceding month.



Service providers were optimistic about the coming 12 months, but the level of business confidence fell to the lowest since June.

Another survey showed manufacturing activity slowed in October from the month before though it remained in the expansion zone.

The Nikkei Composite Output Index, which combines the manufacturing and services sector numbers, rose slightly from 51.1 in September to 51.3 in October.

Barring manufacturing, most of the recent data has shown the economy gathering pace after GDP growth slowed to a three-year low of 5.7% in the June quarter.

Auto sales cooled in October from a rise of more than 10% in September but the biggest companies, led by Maruti Suzuki’s 9.2% expansion, showed positive growth.

Data released earlier this week showed core sector growth at a five-month high, which should give a push to industrial growth that surged to a ninemonth high in August.