The Indian service sector started 2020 on a strong footing, with surging demand underpinning the fastest increases in new orders and output in seven years, according to a private survey. The IHS Markit India Services Business Activity index rose to 55.5 in January, from 53.3 in December, signalling the strongest upturn in output in seven years. The rebound largely stemmed from favourable market conditions and better underlying demand, said the survey.

Commenting on the latest survey results, Pollyanna de Lima, principal economist at IHS Markit, said: "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. Strong domestic demand led to expansions in new business and output not seen for seven years,"

"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 economist said. "One worrying development, however, was the trend for inflation. The service survey pointed to the sharpest increase in input prices in just under seven years."

Data released earlier this week showed India's manufacturing activity expanded at its quickest pace in nearly eight years in January with robust growth in new orders and output.

The Nikkei Manufacturing Purchasing Managers' Index, compiled by IHS Markit, jumped to 55.3 last month from 52.7 in December. It was the highest reading since February 2012.

January data showed that growth of private sector activity moved up a gear, amid broad-based accelerations across manufacturing and services. The Composite PMI Output Index increased from 53.7 in December to a seven-year high of 56.3 in January.

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