After easing in the previous two months, India’s services sector activity signaled a solid and stronger improvement in business conditions in the month of October, aided by accelerating new work along with easing inflationary pressures. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index rose to 52.2 in October from 50.9 in September. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services -- too improved to 53.0 in October from 51.6 in September.
The survey report found that new business at services firms displayed the strongest upturn since July, on the back of favourable market conditions, greater client bases and fruitful advertising. Besides, Indian service providers continued to add to their payrolls. The increase in employment was the fourteenth in as many months and the second fastest since March 2011. But, job creation in the manufacturing sector was weaker than recorded in its service counterpart.
On the price front, service providers’ expenses rose in October but moderately from September’s ten-month high and were below its long-run average. Similarly, charge inflation at service providers cooled during the reported period. The report also noted that although services firms retained an optimistic view towards growth prospects, confidence waned in October. Positive sentiment was supported by expectations of greater inbound tourism, marketing efforts and investment plans, while political uncertainty hampered confidence. The degree of optimism was at a 20-month low.