NEW DELHI: India’s service industry made a smart recovery in October expanding at the fastest pace in a decade on account of improved domestic demand, the latest IHS Markit Services Purchasing Managers’ Index survey revealed.
The IHS Markit Services Purchasing Managers’ Index accelerated to 58.4 last month from 55.2 in September, above the 50-mark separating growth from contraction for a third straight month.
“Indeed, new work intakes increased at a sharp and accelerated rate, the strongest since July 2011. Moreover, the latest upturn was the third in successive months. Survey participants commonly linked sales growth to better underlying demand and successful marketing,” the survey said.
However input prices remained high rising sharply last month due to higher fuel and commodity prices and this has pushed companies to pass on some of the extra cost burden to customers.
“A substantial rise in prices charged for the provision of services in India had no detrimental impact on demand, as companies signalled the strongest monthly expansion in new business in over a decade,” said Pollyanna De Lima, economics associate director at IHS Markit.
Prices charged rose at the sharpest rate since July 2017, suggesting inflation will remain elevated, with the biggest upturn in transport and storage costs as a consequence of the recent surge in global crude prices to near $85 a barrel.
“Service providers were concerned that persistent inflationary pressures could deter growth in the coming year,” De Lima said.
And despite the growth, business confidence remained subdued due to growing concerns surrounding price pressures.
Elsewhere, the latest data continued to point to weak international demand for Indian services.
New export business decreased in October, a trend that has been recorded since the Covid outbreak.
Expansion in manufacturing and services drove the composite index to a near 10-yr high of 58.7 in Oct ober from 55.3 in September.