India's service sector sees growth after 8 months as economy reopens after COVID-19
The Composite PMI Output Index also rose from 54.6 in September to 58.0 in October
With the reopening of the economy after the Covid-19 imposed lockdown, an uptick in the service sector activity was seen for the first time in eight months in October.
According to the IHS Markit survey, the services companies reported an increase in new work intakes, which they attributed to successful marketing efforts and strengthening demand.
The IHS Markit Services Purchasing Managers’ Index(PMI) climbed to 54.1 in October from September’s 49.8. It was the highest reading since February and comfortably above the 50-mark separating growth from contraction, the agency said in a press release.
According to panel members, the upturn was supported by improved market conditions amid the loosening of COVID-19 restrictions.
Commenting on the latest survey results, Economics Associate Director at IHS Markit, Pollyanna De Lima, said: "It's encouraging to see the Indian service sector joining its manufacturing counterpart and posting a recovery in economic conditions from the steep deteriorations caused by the COVID-19 pandemic earlier in the year.”
The survey further noted that the Composite PMI Output Index rose from 54.6 in September to 58.0 in October, signaling the strongest increase in private sector output in close to nine years.
As demand surged, a sharp rise in factory production led to the growth of service activity. Aggregate new orders expanded for the second straight month in October, with the rate of growth accelerating to the highest since January 2013, said the survey.
The survey noted that the services companies continued to report rising expenses at the start of the third quarter of the fiscal year 2020-2021, taking the current sequence of cost inflation to four months. The latest increase was solid and the strongest since February, it said.
However, both the manufacturing and service sector companies recorded lower payroll numbers at the start of the third quarter of fiscal year 2020/21. As a result, private-sector employment declined for the eighth straight month.
Meanwhile, another survey noted that the service sector growth is governed by domestic and global factors.
An economic survey by the Indian Brand Equity Foundation said, “The Indian facilities management market is expected to grow at 17% CAGR between 2015 and 2020 and surpass the US$ 19 billion mark supported by booming real estate, retail, and hospitality sectors.”