Services boom may save the day

India’s services sector is firing on all cylinders. The seasonally adjusted S&P Global India Services PMI Business Activity Index rebounded to 61 in September, after moderating slightly in August. A reading above 50 denotes expansion in activity. The latest print is one of the strongest in over 13 years, remaining above the critical level of 50 for 26 straight months. What is more, for the three months ended September, the index has averaged 61.1, which is sequentially high. Clearly, not only is the services activity resilient, but it is also likely improving.

- Rupali Sarkar

The uptick was broad-based. New business, a key sub-index, rose at the second-fastest pace since June 2010. Further, there was an increase in new export orders, aided by better overseas demand, particularly from North America, Europe and Asia, said the survey report. Meanwhile, the pace of job creation was moderate despite robust order books even though it remains above the long-run average. Another encouraging development is the sizable moderation in input cost inflation to the lowest level since late-2010. If the trend sustains, this will eventually reflect in softer services inflation for the end consumer and will likely help in curbing core (non-food, non-fuel) inflationary pressures in the economy. For now, selling prices of service providers, though solid, was the softest in six months.