Updated: September 4, 2021 6:48:34 am
Services sector activity rebounded in August as new business showed renewed growth, IHS Markit said.
At 56.7 in August, up from 45.4 in July, the seasonally adjusted India Services Business Activity Index was above the 50.0 neutral threshold for the first time in four months. The latest reading pointed to a marked rate of expansion that was the fastest in one-and-a-half years, it said.
“Companies indicated that the reopening of several establishments and increased consumer footfall boosted sales, which in turn supported the first expansion in output in four months and a rebound in business confidence,” IHS said. The data showed that firms had ample capacity to deal with rising new orders, however, which was a factor that prevented job creation.
Where growth was reported, panellists mentioned strong inflows of new work and improved demand conditions. New orders placed with service providers rose in August, ending a three-month sequence of reduction, it said. Moreover, the pace of expansion was marked and the quickest in over eight-and-a-half years.
While demand conditions in the domestic market was generally conducive of growth, firms saw a further decline in new export orders. The downturn was often associated with the pandemic and travel restrictions. The rate of contraction in new business from abroad remained sharp, it said.
Pollyanna De Lima, economics associate director at IHS Markit, said: “The Indian service sector bounced back in August, led by the reopening of several establishments and improved client confidence due to growing vaccine coverage. A substantial pick-up in domestic demand underpinned the strongest monthly increase in new business for over eight-and-a-half years and renewed growth of activity.”
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