AgenciesNEW DELHI: India’s service sector output broadly stabilised in September amid relaxations in the Covid-19 restrictions, a private survey showed on Tuesday even though services employment decreased for the seventh month in a row and at a quicker rate than in August.
The Services Business Activity Index rose for the fifth straight month in September to 49.8 from 41.8 in August. A reading above 50 indicates expansion, while below 50 signals contraction.
As per the survey, while participants were upbeat about the year-ahead outlook for business activity for the first time since April, there were further reductions in new work and employment.
Incoming new business fell moderately, however, and at the slowest rate since March. Input costs meanwhile rose at a quicker pace, while the rate of charge inflation was broadly similar to August.
“The relaxation of lockdown rules in India helped the service sector move towards a recovery in September,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.
As per the survey report, several firms reported that attempts to take on extra workers were hampered by a lack of available labour.
“Backlogs data suggest that hiring efforts will continue in the near term, however, so we could see a better employment trend in coming months provided that people are willing to leave their hometown in search for vacancies,” De Lima said.
In line with hopes that a vaccine for Covid-19 will be rolled out, companies were optimistic about the year-ahead outlook for business activity. September marked the first month since April in which service providers were confident towards growth prospects.
A sister survey last week showed India’s Purchasing Managers’ Index (PMI) rising to the highest in eight-and-half years in September.
Rising from 46.0 in August to 54.6, the Composite* PMI Output Index signalled a marked rate of activity growth across the private sector economy.
“Taking into account the performance of the manufacturing industry, a better picture of the Indian economy is painted. Private sector output expanded for the first time in six months during September, and at an above trend rate, while the increase in sales was the first since February,” De Lima said.
The trend for employment was similar among goods producers and service providers, with companies in both sectors linking a further contraction in headcounts to labour shortages.
The Services Business Activity Index rose for the fifth straight month in September to 49.8 from 41.8 in August. A reading above 50 indicates expansion, while below 50 signals contraction.
As per the survey, while participants were upbeat about the year-ahead outlook for business activity for the first time since April, there were further reductions in new work and employment.
Incoming new business fell moderately, however, and at the slowest rate since March. Input costs meanwhile rose at a quicker pace, while the rate of charge inflation was broadly similar to August.
“The relaxation of lockdown rules in India helped the service sector move towards a recovery in September,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.
As per the survey report, several firms reported that attempts to take on extra workers were hampered by a lack of available labour.
“Backlogs data suggest that hiring efforts will continue in the near term, however, so we could see a better employment trend in coming months provided that people are willing to leave their hometown in search for vacancies,” De Lima said.
In line with hopes that a vaccine for Covid-19 will be rolled out, companies were optimistic about the year-ahead outlook for business activity. September marked the first month since April in which service providers were confident towards growth prospects.
A sister survey last week showed India’s Purchasing Managers’ Index (PMI) rising to the highest in eight-and-half years in September.
Rising from 46.0 in August to 54.6, the Composite* PMI Output Index signalled a marked rate of activity growth across the private sector economy.
“Taking into account the performance of the manufacturing industry, a better picture of the Indian economy is painted. Private sector output expanded for the first time in six months during September, and at an above trend rate, while the increase in sales was the first since February,” De Lima said.
The trend for employment was similar among goods producers and service providers, with companies in both sectors linking a further contraction in headcounts to labour shortages.
Read More News on
Download The Economic Times News App to get Daily Market Updates & Live Business News.
Also Read
4 Comments on this Story
 | SkyWalker 2 hours ago The first killer blow on our economy was demonetization inflicted on the nation with a lot of chest thumping, extended lockdown completed the misery |
 | Hemant Pisat2 hours ago Companies just aren't recruiting, many kept their projects in abeyance, unsure of mid term recovery, and timid to raise an operation costs. Extra workload if any is distributed amongst the present strengths. Service Industry started contracting long time ago, post increased service tax, which led to cutting corners and disguised unemployment. The pains will be sustaining in future. |
 | Mayank Pathak3 hours ago Yes this is a fact that people are very cautious about spending in this scenario but at the same time it has also happened that many companies have just capitalized the situation by giving more work to the manpower and did layoffs |