SERVICES SECTOR SEES FASTEST EXPANSION SINCE FEBRUARY 2020
NEW DELHI: India’s services sector resumed growth in August for the first time in four months, staging the fastest expansion in a year and a half, market information provider IHS Markit Ltd said.
The seasonally adjusted India Services Business Activity Index surged to 56.7 in August, up from 45.4 in July, IHS Markit said in a statement on Friday, adding that this was the first time it crossed the 50 mark in four months. A reading above 50 indicates an overall increase when compared with the previous month.
The index is compiled based on responses from around 400 service sector companies across segments such as consumer (excluding retail), transport, information, communication, finance, insurance, real estate and business services.
The resumption of growth in the service industry, which has been badly hit by the pandemic and the resultant loss of consumer confidence, is welcome news for policymakers, as services account for more than half of India’s economy. June-quarter GDP growth figures released earlier this week had shown that manufacturing and construction activities have already staged a recovery in reclaiming some of the ground lost in the same quarter a year ago, while agriculture, which proved to be last year’s silver lining, has improved further in the first three months of this fiscal.
IHS Markit attributed the service industry growth to improving vaccine access and a receding pandemic. 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. Where growth was reported, businesses surveyed mentioned strong inflows of new work and improved demand conditions.
As far as new orders were concerned, the pace of expansion was the quickest in over eight-and-a-half years. According to the respondents, sales growth stemmed from greater footfall, reopening of firms and successful advertising.
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