India October: Activity in services increases, boosted by rising orders

(Reuters) – India's largest services business grew at its fastest pace in three months in October, driven by a strong recovery in new business, a private survey said on Monday.

The Nikkei / IHS Markit> Purchasing Managers Index rose from 50.9 in September to 52.2 last month, its lowest level in four months.

Demand for subindex tracking rose from 50.1 in September to 52.4. This development, combined with a slower increase in input costs and invoice prices, has boosted overall activity and encouraged companies to accelerate hiring at the fastest pace in six months.

"The cost pressures disappeared in October. At the same time, a large increase in staff – one of the best known for more than seven and a half years – has added to business spending, "said Pollyanna De Lima, Senior Economist at IHS Markit.

"The decline in cost inflation, coupled with competitive pressures, has resulted in only a slight increase in charges."

Some companies said that increased competition prevented them from raising their prices.

Lower cost pressures, along with lower oil prices, could prevent inflation from exceeding the Reserve Bank of India's medium-term target of 4%.

The central bank surprised markets and kept interest rates unchanged last month after increases in June and August. But its bias has changed from "neutral" to "calibrated tightening".

Strong activity in services and manufacturing industry growth were better than expected at 53.0 last month, up from 51.6 in September. Employment grew at its fastest pace in almost eight and a half years.

"A positive outlook is not assured, however. As companies' expectations of future activity are expected to drop to a 20-month low in the manufacturing and service sectors, companies are becoming more cautious about growing uncertainties, "he added. from Lima.

"The sustainability of current market conditions and political concerns have both weighed on optimism and posed downside risks to growth."