PMI for services expands for first time in 8 months, employment still a worry

Source :Sify
Author :Finance Desk
Last Updated: Wed, Nov 4th, 2020, 18:45:46hrs
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New Delhi: The latest Purchasing Managers Index for India Services Business Activity notched up to 54.1, a jump above the 50 mark in as many as 10 months.  

For the month of February, the barometer read 50 (no-change) whereas for Sept'20, the index read 49.8.

A barometer reading of over 50 indicates expansion whereas a score below 50 results in contraction.  

The PMI for manufacturing sector for October recorded a bump and Pollyanna De Lima, Economics associate director at IHS Markit was quoted as saying, "Encouraging to see Indian service sector joining its manufacturing counterpart and posting a recovery in economic conditions from the steep deteriorations caused by the Covid-19 pandemic earlier in the year,"  

Lima further noted that "while a revival of the manufacturing industry began in August, only now the service sector started to heal. Service providers signaled solid expansions in new work and business activity during October".

For service sector firms, the statistic shows an encouraging trend - increase in new work intakes attributed to successful marketing and growing demand.

The survey for services sector also observed a decline in employment, a trend that was observed for manufacturing services. On job front, the survey noted another monthly decline in employment.  

Job shedding continues from what was recorded during September and payroll numbers reportedly contracted across five monitored sub-sectors.

Lima added, "Survey participants indicated that workers on leave had not returned and that a widespread fear of COVID-19 contamination continued to restrict staff supply."

On the price front, the rate of input cost inflation picked up to an eight-month high, but there was a softer rise in prices charged for the provision of services.  

The Composite PMI Output Index, which measures combined services and manufacturing output, rose from 54.6 in September to 58.0 in October, signaling the strongest increase in private sector output in close to nine years.

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