In September, India’s services sector displayed a robust growth trajectory, driven by heightened demand leading to increased output and sales. The S&P Global India Services Purchasing Managers’ Index (PMI) climbed from 60.1 in August to 61 in September, following readings of 62.3 in July, 58.5 in June, and 61.2 in May. A PMI score above 50 signifies expansion, and this trend has been consistent since August 2021, marking its longest such stretch since August 2011.
Mrs. Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, noted that these PMI results brought positive news for India’s economy. In September, business activity and new work intake reached levels not seen in over 13 years. Additionally, increased business optimism for the year ahead, driven by strong demand conditions, suggests further growth across the service sector. India’s services sector contributes over 50% to its GDP, making it one of the world’s fastest-growing sectors.
S&P reports that Indian businesses have witnessed rising foreign demand, particularly from clients in Asia, Europe, and North America. Although it dipped to a three-month low, the overall growth rate remained among the fastest recorded since September 2014.
The S&P Global India Services PMI derives its data from surveys distributed to approximately 400 service-related businesses. Input cost inflation notably slowed down in September, with one of the slowest growth rates since late 2010. Some businesses responded by passing on increased costs to customers through price hikes, while others maintained prices while focusing on attracting new clients.
This PMI data serves as an indicator of the overall economic health. Government statistics reveal that India’s economy grew by 7.8% in the first quarter of the current fiscal year, driven by increased capital spending from both the government and the private sector, along with strong services sector growth. The GDP for January to March 2023 showed a 6.1% increase, leading to an upward revision of the annual growth projection for FY23 from 7% to 7.2%.
S&P Global also released the Purchasing Managers’ Index (PMI) for India’s manufacturing sector in August, which recorded a slower rate of growth at 57.5, the slowest in five months. The composite PMI, which combines manufacturing and services indices, increased to 61 in September from 60.9 in August, primarily due to robust sales performance in the service sector.
