PMI Measuring Services Activity In India Hits 7-Year High In January

On Wednesday, a private survey showed that India's service sector activity accelerated at the fastest pace in seven years for the month of January.

The Nikkei/IHS Markit Services Purchasing Managers' Index (PMI) rose to 55.5 in January from 53.3 in the previous month. It was the highest reading since January 2013 and stayed above the 50-mark (that separates growth from contraction) for the third straight month.

"The Indian service sector sprung to life at the start of 2020, defying expectations of fragility and building on to the momentum gained at the end of 2019," said Pollyanna De Lima, principal economist at IHS Markit, in a release.

The results will be a relief to the markets and policymakers as the survey goes to show an improvement in economic activity.

"With business revenues rising, service providers continued to increase capacity to meet further strong growth in sales. This is good news for jobseekers, particularly when we consider the results from the manufacturing industry which showed the steepest upturn in employment since August 2012," the report said.

A sub-index tracking new business was also at its highest since January 2013, encouraging strong hiring rate.

However, new export business, that measures foreign demand, contracted in January, falling to its lowest since May 2018 on weaker demand from China, the US and Europe.

Growing global risks from China's coronavirus epidemic could put further pressure on exports.

Moreover, prices charged by service firms increased at the fastest pace in nearly 2 years after a sharper rise in input costs forced businesses to transfer some of the inflationary pressure to consumers.

While service providers remained optimistic about growth in the year ahead, the expectations index remained well below the long-term average.