Services PMI points to sustained growth push

India’s services industry expanded for the second month in row in September propped up by improving demand, which prompted companies to increase hiring, ending a nine-month sequence of job shedding, the IHS Markit Services Purchasing Managers’ Index showed.

Though the PMI lost some momentum and eased to 55.2 in September from a 18-month high of 56.7 in August, it stayed well above the 50-mark which separates growth from contraction.

“…buoyed by signs of improvements in underlying demand, Indian service providers took on additional staff during September. The increase in employment ended a nine-month sequence of job shedding, but was marginal overall as some panellists indicated having sufficient workforce to deal with their workloads.

“Indian companies continued to benefit from a recovery in demand as the pandemic receded further and restrictions were lifted. The improved market environment meant that firms managed to secure new work and increase business activity during September,” the survey said.

Business expectations remained positive on hopes that the Covid numbers will fall and restrictions ease further. The outlook, however, remained subdued on concerns over high inflationary pressures. “While forecasts of better demand in the year ahead supported business confidence on output, growth looks set to be constrained by rising inflation expectations,” Pollyanna De Lima, Economics Associate Director at IHS Markit said.

Moody’s upgrades India’s outlook to stable

Rating agency Moody’s on Tuesday upgraded its outlook on India to “stable” from “negative”. It, however, said the risks from a high debt burden and weak debt affordability remain and kept the sovereign rating at ‘Baa3’.

“The decision to change the outlook to stable reflects Moody’s view that the downside risks from negative feedback between the real economy and financial system are receding,” Moody’s Investors Service said.

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