Services PMI expands to 51.7 in January 2018

India’s service sector showcased recovery and expansive trends in January 2018. The sector recorded a fast increase in activity in January in comparison with the past three months, on the back of a renewed rise in new business orders in the month.

Despite an accelerated growth in activity and employment in the sector since December, the growth figures remained meeker than their long-run averages. The seasonally adjusted Nikkei Services Business Activity Index rose to 51.7 in January 2018 against 50.9 in December 2017. The index remained at the neutral level of 50 for the second consecutive month. The mark 50 is sought as a distinct division between contraction and growth. The index had stood at 48.5 in November 2017.

The sector charted the recovery on the back of new business inflows, addressing of backlog issues and expansion in workforce. The sector expanded its workforce for the fifth consecutive month in January 2018, raising the rate of job-creation to its highest since September 2017. However, the sector struggled with the adverse impact of GST on service businesses.

Meanwhile, the manufacturing sector recorded a slight decrease in the Nikkei Composite Output Index, dropping to 52.5 in January 2018 against its 60-month high of 53.0 in December 2017.