India's Output Growth Surges To Strongest In Ten Years: PMI Survey

The seasonally adjusted IHS Markit India Services PMI index signalled the strongest pace of growth in ten-and-a-half years in October, extending the recovery of the Indian service sector. The indicator increased to 58.4 in October from 55.2 in September, indicating that the expansion in services activity has now lasted three months.

As a result, more employment were generated, however company confidence remained low due to rising concerns about price pressures.
Companies increased their fees at the fastest rate in nearly four and a half years as input costs rose steeply again.

The seasonally adjusted India Services Business Activity Index increased from 55.2 in September to 58.4 in October, signalling the fastest rate of expansion in more than a decade and a half. The present expansion sequence has also been prolonged for another three months. Continual improvements in demand, according to panel members, improved sales and, as a result, output growth.

Despite charging more for their services, Indian companies were able to acquire a steady stream of new business. The pace of increase in output prices was the fastest since July 2017. Clients were allegedly burdened with additional costs, according to anecdotal evidence.

The survey said that "Services companies continued to hire additional workers in October. Although moderate, the pace of job creation quickened from September to the strongest since February 2020. Subsequently, companies were able to clear their backlogs of work. Outstanding business decreased for the third month in a row during October, albeit only
slightly".

Although service providers were optimistic that business activity will improve in the coming year, overall attitude remained unchanged from September and was significantly below its long-run average. As the pandemic fades and marketing efforts bear fruit, some businesses predict sales and output to rise, while others are concerned about the impact of inflationary pressures on the recovery.