India services PMI rises for 16th straight month in October on solid upturn in new businesses

Services sector of the Indian economy continued to rise for the 16th straight month during the period of October, following solid upturn in new businesses placed with Indian service providers. Manufacturing production also increased at a quicker rate, one that was the fastest in 46 months.

India’s seasonally adjusted Nikkei Services Business Activity Index rose to 54.5 in October, compared to 52.0 in September. Subsequently, the seasonally adjusted Nikkei India Composite PMI Output Index rose from 52.4 in September to 55.4 in October. This pointed to a marked pace of expansion in private sector activity that was the quickest in nearly four years.

October data highlighted ongoing pressures on Indian service providers’ capacity, as unfinished business volumes rose for the fifth consecutive month. Little-changed since September, the overall rate of backlog accumulation was solid. A similar trend was seen among manufacturers, where outstanding business rose solidly.

Indian services companies remained upbeat towards the 12-month outlook for activity, but the overall level of sentiment was at a four-month low. Service sector employment was unchanged over the month, with almost all survey participants reporting the same payroll numbers as in September. Likewise, manufacturing staffing levels stagnated in October.

"Nonetheless, a healthy level of overall positive sentiment regarding future business opportunities was  seen and, with competitive pressures offering just a minor bump in the road of confidence, the services economy looks set to maintain its strong performance in the near term," said Pollyanna De Lima, Economist, IHS Markit.