Is jobs drought about to end?

Mint Asia ST - - Mark To Market -

The

pri­vate sec­tor ex­panded a bit in Septem­ber af­ter two months of con­trac­tion, as the Nikkei In­dia Com­pos­ite PMI (Pur­chas­ing Man­agers’ In­dex) Out­put In­dex rose to 51.1. The com­pos­ite in­dex, which tracks both man­u­fac­tur­ing and ser­vices sec­tors, is an in­di­ca­tor of pri­vate sec­tor eco­nomic ac­tiv­ity in the coun­try. A read­ing above 50 in­di­cates ex­pan­sion, while one be­low 50 points to con­trac­tion.

Re­gain­ing some lost ground since the im­ple­men­ta­tion of the goods and ser­vices tax in July, both man­u­fac­tur­ers and ser­vice providers saw higher out­put and new busi­ness.

Though the im­prove­ment was slight, ser­vices sec­tor out­put rose for the first time in three months. As a re­sult, the sea­son­ally ad­justed Nikkei In­dia Ser­vices PMI Busi­ness Ac­tiv­ity In­dex rose from 47.5 in Au­gust to 50.7 in Septem­ber. But per­haps the most in­ter­est­ing part of the sur­vey was that both man­u­fac­tur­ing and ser­vices sec­tors in­creased hir­ing. For the ser­vices sec­tor, the rate of em­ploy­ment growth was the strong­est since June 2011, while for man­u­fac­tur­ing it was the fastest since Oc­to­ber 2012. Does this fi­nally re­verse the much-writ­ten-about job drought?

Ac­cord­ing to Aashna Dod­hia, an econ­o­mist at IHS Markit and au­thor of the re­port, “The labour mar­ket was strength­ened over the month as the pace of job cre­ation quick­ened to the fastest since mid-2011, led by the trans­port and stor­age and con­sumer ser­vices sub­sec­tors.”

It’s likely that af­ter con­tract­ing in the pre­vi­ous months, the rise in the em­ploy­ment in­dex in­di­cates new hir­ing as larger com­pa­nies adapt to the new tax regime. The pace of job cre­ation isn’t very strong and it re­mains to be seen if it is sus­tain­able. Nev­er­the­less, it does pro­vide a glim­mer of hope.

Note, how­ever, that this sur­vey is of large com­pa­nies and hence is not rep­re­sen­ta­tive of the small-scale sec­tor or the in­for­mal econ­omy, which is where the jobs for the masses are.

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