NEW DELHI: Activity in the country’s crucial services sector continued to expand in September, helped by the lifting of restrictions across the country but the pace was slower than August, and employment rose for the first time in 10 months in the segment, a survey showed on Tuesday.
The India Services Business Activity Index posted a reading of 55.2 in September, highlighting a marked increase in output. Despite falling from August’s 18-month high of 56.7, the latest data remained well above its long-run average. The 50-point mark separates expansion from contraction. The survey is compiled by IHS Markit from responses to questionnaires sent to a panel of around 400 service sector companies.
Companies indicated that greater footfall boosted sales and output in the latest month, with some taking on additional staff to cope with rising workloads. Buoyed by signs of improvements in underlying demand, Indian service providers took on additional staff during September. The increase in employment ended a nine-month sequence of job shedding, but was marginal overall as some panellists indicated having sufficient workforces to deal with their workloads, the survey showed.
“Indian companies continued to benefit from a recovery in demand as Covid receded further and curbs were lifted. The improved market environment meant that firms managed to secure new work and increase business activity in September,” said Pollyanna De Lima, economics associate director at IHS Markit. “Signs from forward-looking indicators were mixed. Employment returned to growth territory, posting the first rise since the onset of the pandemic, suggesting that the rebound in demand is expected to be sustained and that further increases in business activity are in the pipeline,” said De Lima.
Despite the sustained recovery of the sector, business confidence weakened in September, the survey showed.
“Anecdotal evidence suggested that optimism was curbed by worries regarding inflationary pressures. Where output was predicted to expand over the course of the coming 12 months, firms largely expected the ongoing retreat of the pandemic and associated restrictions to support growth,” according to the survey.
