Services Activity Expanded in January as PMI Rose to 52.8, Says IHS Markit Service

Story Highlights
  • The IHS India Services Business Activity Index rose to 52.8 in January from 52.3 in December
  • New business rose in January, marking four months of expansion, the growth was moderate but accelerated from December

New Delhi: According to the latest IHS Markit Service, Purchasing Managers Index, the Indian service sector continued to expand in January, with the growth of new work and business activity quickening since December. Moreover, the launch of the coronavirus disease 2019 (COVID-19) vaccine program boosted optimism towards the 12-month outlook for output. 

The IHS India Services Business Activity Index set to make a nominal rise to 52.8 in January from 52.3 in December pointing to a quicker expansion in output. As per the survey, the rise in new business was centered on the domestic market, as new export work decreased further. The pace of contraction remained sharp, despite easing to the slowest since last March. Survey participants indicated that travel restrictions and the Covid-19 pandemic dampened international demand for services.

Moreover, the growth of total new orders was helped by ongoing price discounting strategies. According to the survey, companies that lowered their fees mentioned efforts to beat the competition and attract new customers. Input costs increased for the seventh straight month, with monitored companies reporting higher prices for fuel and a wide range of materials. Although weaker than in December, the rate of cost inflation was marked in the context of historical data. 

Looking ahead, 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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