India’s services sector picked up last month after dropping to a 10-month low in September, with HSBC India Services Business Activity Index, or services PMI for October at 58.5 amid a marked expansion in demand, data released by S&P Global showed. According to several panel members, the increase in output is attributed to a healthy customer demand domestically and from abroad. In response to positive sales developments, and optimism regarding near-term prospects, firms recruited extra workers to the greatest degree in just over two years, it said.
Pranjul Bhandari, Chief India Economist at HSBC, said, “India’s services PMI recovered from its ten-month low in September to reach 58.5 last month. During October, the Indian services sector experienced strong expansions in output and consumer demand, as well as job creation, which achieved a 26-month high.”
Underlying data indicated that capacity pressures also boosted job creation. Outstanding business volumes increased for the thirty-fourth straight month, with the rate of accumulation quickening to the highest since July.
Input costs, meanwhile, increased at the strongest pace for three months in October. Higher business expenses were largely attributed to rising wage bills and food costs. Efforts to pass these on to clients meant that selling charges were hiked again. “Although input price inflation is accelerating from higher food and wage costs, the general inflation trajectory remains below the long-run average. Meanwhile, business sentiment receded slightly from September, but the future activity index still indicates broadly positive expectations for the year ahead,” Pranjul Bhandari added.
The seasonally adjusted HSBC India Services Business Activity Index is based on a single question asking how the level of business activity compares with the situation the month before. “Robust sales pipelines and strong demand conditions supported the upturn in business activity. The rate of sales growth was historically elevated and accelerated from September’s ten-month low,” the report maintained.
The data released by S&P Global also highlighted a recovery in growth of new export sales across India’s service economy, which survey respondents attributed to strengthening demand from clients in Africa, Asia, the Americas, the Middle East and the UK.