Services sector output zooms in Aug

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SME Times News Bureau | 03 Sep, 2021
Receding impact of Covid 2.0, as well as the accelerated vaccination drive, lifted the growth rate of India's services output in August, IHS Markit India Services PMI showed on Friday.

Companies, in the data report, indicated the reopening of several establishments and increased consumer footfall boosted sales, which in turn supported the first expansion in output in four months and a rebound in business confidence.

The data showed that firms had ample capacity to deal with rising new orders, but this was a factor that prevented job creation.

Consequently, the seasonally adjusted India Services Business Activity Index rose to 56.7 (index reading) in August as against a reading of 50 in July.

The PMI ranges between 0 and 100, with a reading above 50 indicating an overall increase compared to the previous month.

As per the report, the latest reading pointed to a marked rate of expansion that was the fastest in one and a half years.

On the combined level -- manufacturing and services, the Composite PMI Output Index rose from 49.2 in July to 55.4 in August, pointing to a renewed increase in private sector activity across India, ending a three-month period of downturn.

IHS Markit's Economics' Associate Director Pollyanna De Lima said: "The Indian service sector bounced back in August, led by the reopening of several establishments and improved client confidence due to growing vaccine coverage. A substantial pick-up in domestic demand underpinned the strongest monthly increase in new business for over eight-and-a-half years and renewed growth of activity."

"Service providers foresee a brighter outlook, with firms indicating that the economic recovery could be sustained if restrictions continue to be lifted and further waves of contamination can be avoided. This was a notable turnaround in confidence from July, when companies were pessimistic towards growth prospects."