Macro Economy

Good news for Modi Govt: India shows fastest jobs growth in over 7 years

New Delhi | Updated on May 04, 2018

India’s services sector continued to improve in April, says Nikkei India Services Business Activity Index

Nikkei India Services PMI jumps to 51.3 in April from 50.3 in March

Services' growth is at a new high as Nikkei India Services Purchasing Managers' index (PMI) rose to 51.3 in April from 50.3 in March. Index above 50 shows expansion while below 50 reflects contraction.

Prepared on the data compiled from monthly replies to questionnaires sent to purchasing executives in around 400 private service sector companies, the index signalled a faster expansion in output at Indian service firms than in the prior month. Report accompanied index concluded that activity rises again as employment growth improves to fastest since March 2011. This is good news for the Modi government as it is facing lot of flank on job creation data released on the basis of payroll last month.

Commenting on the latest data, Aashna Dodhia, Economist at IHS Markit said that it was encouraging to see the Indian service economy report a positive start in the April quarter, with output growth gaining momentum as demand conditions improve. She also mentioned that the service economy continued to recover further from February’s temporary decline. However, “as the service economy contributes a greater proportion to real GDP, and continued to be outperformed by its manufacturing counterpart, overall private sector growth was only modest and below the historical trend,” she said

According to anecdotal evidence, greater inflows of new work helped to bolster activity. However, the latest upturn was modest and remained weaker than the series trend. With both manufacturing and services PMI registering increase, the Nikkei India Composite PMI Output Index rose from 50.8 to a three-month high of 51.9 in April. The latest reading was consistent with a modest rise in overall business activity. April data pointed to higher order book volumes across India's service sector.

The report said that outstanding business at service companies continued to increase during April. Despite softening from the prior month, the pace of accumulation was solid. Reflective of improvements in demand conditions and greater output requirements, service companies raised their staffing levels during April. Furthermore, job creation was solid and accelerated to the strongest in over seven years, it said.

Published on May 04, 2018

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