India's headline services index expanded further in the month of October on the back of rise in output activity. Even as the input price pressures intensified, greater inflows of new business and increasing backlogs of work at service providers also helped the index to move upwards.
The seasonally adjusted Nikkei Services Business Activity Index surged to 51.7 in October from 50.7 in September, posting above the neutral 50.0 threshold for the second consecutive month. The Nikkei India Composite PMI Output Index which measures both manufacturing and services too rose to 51.3 in October from 51.1 in September, signaling slight rate of expansion.
As per the survey report, firm raised staffing levels for the second consecutive month on account of increased capacity pressures, however the job creation rate slowed from the preceding month. The report further noted that the service providers exhibited optimism towards the coming 12-month outlook for activity, despite levels of business confidence dipping to the weakest since June.
On the inflation front, input cost inflation accelerated in October month, by rising at the joint-fastest pace since April 2016 whilst firms raised output charges. At the sector level, the sharpest rise in input prices was noted in Consumer Services, followed by Real Estate & Business Services. In the manufacturing industry, purchase price inflation accelerated to the fastest pace since May and the companies raised their output prices to pass on higher input costs to clients.
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