Services sector activities gathered pace in October, driven by robust domestic demand, as shown by the Purchasing Managers’ Index (PMI) for services, which rose to 55.1. It was at 54.3 in September which was a six-month low. Increased hiring activities along with new business gains contributed to this upturn. As a result, employment also rose for the fifth month in a row. This is encouraging, particularly amid high inflation.
A detailed look shows that at the sub-sector level it was the consumer services that was the highest contributor in terms of new orders, employment and business activity while finance & insurance came in second place. It is also notable that while domestic market was the main source of new business gains, monthly deterioration in international demand was witnessed in October – a trend evident since the onset of COVID-19 in March 2020.
Meanwhile, according to a latest report for the October to December period, optimism is quite evident in the Indian services sector with 73% of employers in the sector planning to increase hiring during this period. It shows that IT sector led this optimism (96%), followed by educational services (95%), e-commerce & allied start-ups (92%), telecommunications (90%) and retail [essential] (79%). This hiring intent is displayed not only by large (79%) and medium sized firms (45%) but also by small firms (57%).