India’s services sector maintained upside also in the first month of 2021 with the growth of new work and business activity quickening since December, said the latest IHS Markit report on the country's Services PMI.
According to the data, the seasonally adjusted India Services Business Activity Index rose from 52.3 in December to 52.8 in January, pointing to a quicker expansion in output.
However, IHS Market on the latest figure said, "Still, the headline figure remained below its long-run average of 53.3 and was consistent with a moderate pace of growth. Companies that reported higher business activity commented on greater client numbers and improved demand conditions."
Also, new business rose in January, marking four months of expansion. The pace of growth was moderate, but accelerated from December. According to panellists, marketing efforts, the reopening of some establishments and strengthening demand all supported the increase in sales, the report highlighted.
On the latest performance, Pollyanna De Lima, Economics Associate Director at IHS Markit, said, "The Indian service sector enjoyed good levels of activity in January, with new business volumes rising for the fourth successive month and growth rates for both measures picking up from December."
De Lima added, "The main area of concern is the extent to which costs are rising across the services economy, with the rate of inflation remaining above trend despite easing from December. There are signs that higher costs are preventing firms from taking on additional staff, with the PMI survey showing a second successive fall in employment."
"But, with business optimism rising to an 11-month high in light of the new COVID-19 immunisation program, the service sector looks set to sustain growth and confidence towards hiring may improve as COVID-19 concerns diminish," De Lima said.
Looking ahead, IHS Markets report stated that service providers were confident of a rise in output in the coming 12 months. Positive sentiment was supported by beliefs that the roll-out of COVID-19 vaccines would underpin demand growth and improvements in the wider economy. The overall degree of optimism was at an 11-month high.
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