India’s services sector reported the sharpest rise in job creation in over 14 years in August, according to the S&P Global India Services Purchase Managers’ Index released on Monday.
The activity picked up after a four-month low – the index stood at 57.2 in August, as compared to 55.5 in July and 59.2 in June.
The purchasing managers’ index is an indicator of business activity in the manufacturing and services sectors. S&P Global said that it takes into account new orders, output, employment, suppliers’ delivery times and stocks of purchases to calculate the purchasing managers’ index.
A score above 50 indicates expansion while a score below 50 denotes contraction.
S&G Global said that the activity picked in August up because of strong gains in new business, ongoing improvements in demand, job creation and overtime work.
“Amid reports of favourable demand conditions and successful advertising, there was a further increase in new business placed with services firms during August,” the report said. “The rate of expansion was sharp and quickened from July.”
The firm said that the growth was complemented by a slower increase in input costs during August.
Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said that service sector companies in India continued to benefit from the lifting of coronavirus-related restrictions and ongoing marketing efforts.
De Lima added that business confidence strengthened substantially in August, reaching its highest level since May 2018.
“Finance and insurance was the brightest area of the service economy in August, leading with regards to sales and output growth,” she said. “As for input cost inflation, Consumer Services topped the sector rankings but it was in Transport, Information & Communication that the fastest rise in selling prices was recorded.”
On Wednesday, government data showed that India’s gross domestic product grew by 13.5% in the April-June quarter.
The growth rate in the first quarter of this financial year was below expectations as in August, the Reserve Bank of India had projected the estimated first quarter GDP growth to be 16.2%. The central bank has estimated GDP growth projection for the entire financial year 2022-’23 to be retained at 7.2%.
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