Services sector, the mainstay of the economy, which bore the brunt of the Covid pandemic, saw a decadal-high acceleration in October on the back of improved demand despite inflation risk looming.
The IHS Markit purchasing managers’ index (PMI) rose to 58.4 from 55.2 in September. Services firms also hired more people but cited risk to price rise on costlier fuel and goods. The firms said they faced input price rise for 16 months in a row.
A reading above 50 indicates expansion and below that points to contraction.
This is the third successive expansion in the services sector, which contributes nearly 60% to the economy and generates more jobs than any other sector. The sector is also solely responsible for inflow of more than half of foreign direct investments.
“The sector’s recovery entered its third straight month, with firms scaling up activity at the fastest pace in ten-and-a-half years and creating more jobs,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.
Firms surveyed said better underlying demand and successful marketing were responsible for a handsome growth in the sector. However, they cited higher fuel, goods, staff and transport costs as potential risks to future growth.
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(Published 03 November 2021, 19:14 IST)
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