Services PMI climbs to 52.2 in Oct, sees quickest growth since July

The country's services sector in October expanded at the quickest pace since July, driven by significant increase in new business orders, which in turn led to robust workforce expansion, a monthly survey said Monday.

The seasonally adjusted Nikkei India Services Business Activity Index rose to 52.2 in October, from 50.9 in September.

The services PMI was in the expansion territory for the fifth straight month. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.

According to panellists, improved order flows supported the pick-up in output amid favourable market conditions, greater client bases and fruitful advertising.

On the job front, Indian service providers continued to add to their payrolls and the sector witnessed the second-strongest increase in employment since March 2011.

Meanwhile, the Nikkei India Composite PMI Output Index, that maps both the manufacturing as well as the services sector, improved from 51.6 in September to 53 in October; and highlighted the strongest expansion in private sector activity since July.

The PMI surveys brought positive news of stronger economic growth at the start of the third quarter of FY 2018/19, together indicating a welcome rebound in private sector expansion from September's four-month low," said Pollyanna De Lima, Principal Economist at IHS Markit, and author of the report.

On the prices front, cost-inflationary pressures eased, resulting in a softer increase in selling prices.

"Cost pressures faded in October, but service providers continued to report rising costs, especially for food and fuel," Lima said adding that a robust expansion in workforces added to firms' expenses.

The survey further noted that though the business sentiment remained positive, it was hampered by political uncertainty.

"...firms are becoming more guarded in the face of growing uncertainties. The sustainability of current market conditions and political worries both weighed on optimism and posed downside risks to growth," Lima said.