PMI rises to 52.8, leads to expansion in services activity

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.

That improved sentiment was in line with findings of a Reuters poll last month that predicted Asia’s third-largest economy would recover from the coronavirus crisis more strongly than previously thought, lifted by the government’s “wealth and wellness” budget announced on February 1, 2021.

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Further, the survey said the rise in new business was centred on the domestic market, as new export work decreased further as travel restrictions and the COVID-19 pandemic dampened international demand for services.

Meanwhile, the launch of COVID-19 vaccine programme boosted optimism towards the 12-month outlook for output. The overall degree of optimism touched an 11-month high.

Meanwhile, business activity across the private sector expanded at a marked and accelerated pace at the start of 2021, with growth picking up among manufacturers and service providers.

The Composite PMI (Purchasing Managers’ Index) Output Index, which measures combined services and manufacturing output, edged up to 55.8 in January, from 54.9 in December.

There were back-to-back declines in service sector employment. The pace of job shedding was, however, marginal as 97 per cent of survey members indicated no change in payroll numbers since the preceding survey period.