Service sector activity rises to 61 in September
Input cost price index softened 2.8 points to 54.4. Output price index too fell 1 point to 53.2 in the reporting month
Service sector activity, measured by the Services Purchasing Managers Index (PMI), grew to 61 in September on higher demand , according to a statement released by the S&P Global Market Intelligence on Thursday. The reading was 0.9 points more than the August print of 60.1 points.
The index averaged 61.1 in the second quarter of 2023-24, which is more than the 60.6 imprint in the preceding three months. The growth in September was due to effective marketing, favourable demand and improved new businesses, S&P said in its statement.
New business index grew to 61.2 points in September, 1.2 points more than the August reading. This component grew the most among all other sub-indices in the reporting month, said Rahul Bajoria, Head of emerging markets Asia Economics Research at Barclays. Export orders were at 54.1 points in September, led by demand from Asia, North America and Europe. Increased new businesses and higher workload also lead to an expansion in the employment PMI, which is at 52 points in September.
Input cost price index softened 2.8 points to 54.4. Output price index too fell 1 point to 53.2 in the reporting month. Service charges rose at a softer rate as cost pressures are at one of the lowest levels in two-and-a-half years, said Polyanna De Lima, Economics Associate Director at S&P Market Intelligence. While this may mean that inflation will cool in the near term, “worries about potential fluctuations in food prices due to El Niño means the RBI is highly unlikely to cut rates until early next year” Lima added.
Composite PMI index, which is the weighted average of both the manufacturing and service activity indices, was at 61 in September against 60.9 the previous month, as sales in private sector grew at the second-fastest pace in 13 years. This was not the case with manufacturers, as sales growth in the goods sector was slower. The composite input price index showed convergence towards the output price index, according to Barclays.
Growth in manufacturing and service sectors indicate robust sentiment on both domestic a and external demand, Bajoria said. Barclays Research forecast the current year GDP growth at 6.3% and said that the service sector would continue to lead growth. It also forecast GDP to grow at 6.5% in 2024-25.
