Indian services sector grows at fastest pace in 18 months: PMI

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India’s services sector has grown at the fastest pace in the month of August. According to the monthly PMI survey, due to gradual demand rise and strong inflows of new work, the sector has witnessed a fast-paced growth in 18 months. In August, the seasonally adjusted India Services Business Activity Index was reported to be around 56.7. It was 45.4 in July. A print above 50 means expansion, while a score below 50 denotes contraction in Purchasing Managers’ Index (PMI). The sales were increased with increased consumers’ footfalls and restoration of business activities. This indicates the first signs of expansion in output and business confidence restoration in four months.

“The Indian service sector bounced back in August, led by the reopening of several establishments and improved client confidence due to growing vaccine coverage,” said Pollyanna De Lima, economics associate director at IHS Markit. In August the new orders placed with service providers saw a rise. The pace of expansion was the quickest in over eight-and-a-half years. The new export orders declined in firms. This was due to pandemic-related disruptions and travel restrictions.

“The service providers anticipate a positive outlook, with firms indicating that the economic recovery could be continued if restrictions will be lifted and any waves of Covid-19 does not happen in future,” Lima said. There has also been an increase in business activity in the private sector. The sector was experiencing a downturn for the last three months.

The Composite PMI Output Index — which measures combined services and manufacturing output — was up from 49.2 in July to 55.4 in August.

“Services firms outperformed manufacturers for the first time in over three years,” the survey said.

The Indian economy has grown by a record 20.1% in the April-June quarter on the macroeconomic front.