India's services activity strongest in 7 yrs: PMI

The Markit surveys for services PMI cover transport and communication, financial intermediaries, business and personal services, computing & IT and hotels and restaurants

Signalling a strong upturn in the country's services sector, a global private survey Wednesday showed the services activity rising to a seven-year high of 55.5 in January from 53.3 in December.

The IHS Markit India Services Business Activity Index rose to this level for the first time since 2013, a welcome news for job seekers.

A figure greater than 50 denotes expansion, 50 is average and anything below 50 means that the economy is contracting.

The survey showed a sharp increase in new business orders, leading to job creation and business optimism amid favourable market conditions. It showed fresh business orders were mainly generated domestically, as exports decreased at the start of the year. New work intakes also expanded to the greatest extent in seven years, said Pollyanna de Lima, Principal Economist at IHS Markit.

But PMI is mostly the sentiment tracking indicator. It tracks the economic health of a few hundred private companies and is a reflection of how many purchasing managers have reported better than normal business conditions in any given month. In India, where a lot of business activities are concentrated in the small and medium sectors, which are largely un-organised, the PMI is of little help.

"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," Lima 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, with companies mostly absorbing the added cost burdens themselves instead of fully passing these on to their customers," Lima said.

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.