Services followed manufacturing in putting up a better performance during October as the Purchasing Managers’ Index (PMI) for services rose to 55.1 from a six-month low of 54.3 in September. Importantly, more job creation was possible during this period.
On Tuesday, S&P Global had said manufacturing PMI rose to 55.3 in October.
The services sector has more than 53 per cent share in Gross Value Added (GVA) in the Indian economy. Executives from 400 service providers participated in the survey conducted by S&P Global, and based on the result, an index known as PMI is prepared. A PMI above 50 shows expansion, while anything less than 50 reflects contraction. The current reading of PMI services at 54.3 is the 15th running month of expansion.
PMI for services covers sectors including consumer (excluding retail), transport, information, communication, finance, insurance, real estate and business services. The survey results show that consumer services led growth in business activity, new orders and employment. Finance & Insurance came in second on these three measures, while Transport, Information & Communication was at the bottom.
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said: the results show us that service providers had no trouble securing new work in October, despite lifting their charges again. Hence, the sector remained firmly inside expansion territory as business activity and payroll numbers were raised to support strengthening demand.
“Optimism towards a more positive environment boosted job creation in October, as service providers sought to adjust capacities to accommodate expected increases in new work. Sentiment towards the year-ahead outlook for business activity improved to the highest in close to eight years,” she said.
On job creation, S&P Global said ongoing increases in new business and output requirements continued to support job creation in the service economy. Employment rose for the fifth month in a row and at the second-fastest pace in over three years (behind August). “Optimistic growth projections also boosted job creation in October, with 30 per cent of survey members forecasting higher volumes of business activity by October 2023. Overall, confidence was at its highest level in just under eight years,” it said.
According to De Lima, many companies indicated that higher food, fuel and retail prices pushed up their overall expenses in October. With some of this additional cost burden shared with customers, prices charged for the provision of services likewise rose. Rates of input cost and output charge inflation quickened from September and were above their respective averages,” she said.