India's Services Sector PMI Expands In September, Hits 61 On Robust Demand

The services PMI has been above 50 for 26 months in a row

The services sector PMI covers non-retail consumer services, transport, information, communication, finance, insurance, real estate, and businesses.

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Services sector in India continued to expand in September on robust demand, with the purchasing managers' index (PMI) for the sector rising to 61.0 from 60.1 in August, data released by S&P Global on Thursday said. The September services PMI remains significantly above the key level of 50 that separates expansion in activity from a contraction. The services PMI has been above 50 for 26 months in a row.

Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, "The latest PMI results brought more positive news for India's service economy, with September seeing business activity and new work intakes rising to one of the greatest extents in over 13 years."

The PMI is a survey-based indicator based on the responses of around 400 service companies. The sectors it covers includes non-retail consumer services, transport, information, communication, finance, insurance, real estate, and business services. An index is calculated for each sector, all of which are then combined to give an overall PMI figure.

"Moreover, an upturn in business optimism about the year ahead, fuelled by buoyant demand conditions, bode well to further growth across the service sector. Unsurprisingly, job creation was sustained as the business mood improved," De Lima added.  Advertising was also cited as a key factor in boosting sales.

Given that the PMI measures change in activity from the previous month and is seasonally adjusted, it is seen as a good indicator of the momentum in economic activity. Further, it is the most immediately available data point – PMI for any given month, both for the services and manufacturing sectors, is released in the first week of the subsequent month.

The manufacturing PMI, however, fell to a five-month low in September as new orders rose at a softer pace, which tempered production growth. The manufacturing PMI declined to 57.5 in September, down from 58.6 in August, the lowest in five months. The September data pointed to an improvement in overall operating conditions for the 27th straight month. In PMI parlance, a print above 50 means expansion while a score below 50 indicates contraction.