New Delhi: India’s services sector just managed to enter positive growth zone in September for the first time in three months after hit by GST jitters.
The Nikkei India Services PMI Business Activity Index rose to 50.7 in September — from 47.5 in August — a reading that pointed to a slight pace of expansion.
Any figure above 50 means positive growth and below 50 means contraction in activity.
“The Indian service sector recovered from the GST related contractions registered in the previous two months, as signalled by renewed increases in new business and output. Greater workloads supported job creation in September, with the rate of employment growth the strongest since June 2011. Input cost inflation accelerated in the latest month, while output charges rose at the weakest rate in since June,” said the survey.
It said that companies indicated that the combination of marketing campaigns and strengthening demand conditions led to new business growth in September. However, it pointed out that the increase was slight overall, but the first since June.
“The Indian private sector regained some lost ground since the implementation of July’s GST as service providers followed the manufacturing industry back to growth. The service sector registered slight expansions in output and new orders,” said Aashna Dodhia, economist at IHS Markit, and author of the report.
The report said that improving economic environment supported job creation, with services employment in fact increasing at the fastest rate in 75 months.
It said that the service providers remained optimistic towards growth prospects over the coming 12 months, linked to forecasts of improved economic conditions and planned investments.
The Reserve Bank, in its policy review meet on October 4, kept benchmark interest rate unchanged on fears of rising inflation while lowering growth forecast to 6.7 per cent for the current fiscal.
