Indian services sector moves towards stabilisation in September

India’s services sector activity stabilised in the month of September, with the relaxation of the Coronavirus pandemic 2019 (COVID-19) restrictions.

As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index rose to 49.8 in September from 41.8 in August. Further, Nikkei India Composite PMI Output Index, which measures both manufacturing and services, surged to 54.6 in September from 46.0 in August.

The report stated that the service sector output broadly stabilised during September. New orders from abroad contracted at the slowest pace in six months but here, the reduction was sharp. There was a sharp rise in outstanding business at the companies operating in the Indian services sector at the end of the second quarter of the fiscal year 2020-21. Moreover, the rate of backlog accumulation was little-changed from August's survey record.

On the price front, input prices rose in September, with monitored companies citing higher fuel, meat, and vegetable costs. The overall rate of inflation was at a seven-month high but remained below its long-run average. Besides, prices charged for the provision of services in India increased during September, as was the case in August. The rate of inflation was broadly similar to that seen in the preceding survey period thereby, remaining modest by historical standards. The companies that lifted their fees indicated that additional cost burdens had been shared with clients.