Services sector grows at fast clip in October

Tribune News Service

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New Delhi, November 3

Activity in India’s services sector recorded a 10-year high in growth due to greater consumer spending and ease of travel due to the tapering of the pandemic, said the IHS Markit India Services Purchasing Managers’ Index (PMI) survey released on Wednesday.

The Composite PMI Output Index also rose from 55.3 in September to 58.7 due to a positive performance on the manufacturing side as well.

Union Finance Minister Nirmala Sitharaman reposted that the services PMI stood at 58.4 in October. In the PMI survey, numbers over 50 means expansion. In September, the PMI was 55.2 and in August 56.7.

Intakes by new services firms increased at the sharpest rate since July 2011 and as the previous two months’ figures showed, stayed in positive territory for the third straight month. During this period, GST collection also remained above the Rs 1-lakh-crore mark with figures of Rs 130 lakh crore in October being the second highest since the launch of this composite nation-wide tax.

The strong growth in the services sector, however, is powered only by domestic demand while overseas orders still remain weak. “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 pandemic. But the rate of contraction was the weakest since March,” noted the PMI survey.

The international demand for Indian services is poised to grow because international travel restrictions are gradually being dismantled and new export businesses are growing at a fast pace.

On the domestic front, higher fuel, material, retail, staff and transport costs were beginning to pose difficulties. The rate of inflation was the highest since April and had led to a steady rise in input costs for Indian services companies.