The growth of India’s service sector has hit a seven-year high in January, raising hopes of an economic recovery on the basis of strong domestic demand, stated a survey released on Wednesday.
As reported by Business Today, the IHS Markit has released its India Services Business Activity Index which showed that the index increased to 55.5 in January compared to 53.3 in December, indicating the strongest growth since January 2013. A reading above 50-mark indicates growth, while one below it reflects contraction.
This was the first month of expansion for Services PMI after three straight months of contraction. It was attributed to favourable market conditions and better underlying demand, according to survey participants.
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Two days back, The IHS Markit had released its India Manufacturing Purchasing Manager’s Index, which showed an increase in manufacturing activity in the country. The index had risen to 55.3 in January from 52.7 in December.
According to the service sector index, the January data showed that the growth of private sector activity moved up a gear, amid broad-based accelerations across manufacturing and services. The IHS Markit survey stated that the main factor boosting growth was a sudden wave of new business. Aggregate sales rose at the sharpest pace since January 2013, with quicker increases evident at goods producers and service providers.
Pollyanna de Lima, the principal economist at IHS Markit stated, “The Indian service sector jumped to life at the start of 2020, defying expectations of fragility and building on to the momentum gained at the end of 2019.”
“With new business growth ticking higher, services companies continued to add to their workforces. The rate of job creation was little-changed from December, thereby remaining above its long-run average,” IHS Markit said in its report.
Meanwhile, rates of input cost and output charge inflation in the private sector accelerated to 66- and 30-month highs, respectively. The overall rate of cost inflation was sharp and the fastest in close to seven years, as per the report.