India services activity returned to growth in September: Study
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The lingering impact of the government's cash ban late last year pushed?growth?in Asia's third-largest economy to slow unexpectedly to a three-year low of 5.7 percent in the April-June quarter from a year earlier
ActivityinIndia'sservicescompanies limped out of contraction in September asdemandrecovered and pushed firms to increase hiring at the fastest pace in over six years, a business survey showed on Thursday.
The lingering impact of the government's cash ban late last year pushedgrowthin Asia's third-largest economy to slow unexpectedly to a three-year low of 5.7 per cent in the April-June quarter from a year earlier.
Disruptions to businesses from confusion on product pricing after the implementation of a goods andservicestax (GST) on July 1, which aimed to unify multiple taxes, have also cast a shadow on economicgrowth.
But last month, a surge indemandhelped a recovery inactivityamongservicesfirms after contracting for two months prior to that.
The Nikkei/IHS MarkitServicesPurchasing Managers' Index rose to 50.7 in September from 47.5 in August, moving back above the 50-mark that separatesgrowthfrom contraction.
"TheIndian private sector regained some lost ground since the implementation of July's goods andservicestax (GST) as service providers followed the manufacturing industry back togrowth," said Aashna Dodhia, an economist at IHS Markit.
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A sub-index on new business, which measures both domestic and foreigndemand, jumped to 51.1 from 47.3 in August.
That pushed firms to increase hiring at the fastest pace since June 2011 inSeptember after cutting headcount in the previous two months.
A compositePMI, which takes into account both manufacturing andservicesactivity, returned above break-even last month to 51.1 from 49.0 in August, aided by an expansion in manufacturingactivityinSeptember.
Both manufacturing andservicesfirms continued to absorb some input cost pressures in September to attractdemand, which is likely to keep inflation below the Reserve Bank ofIndia's 4 percent medium-term target.
But the RBI kept its policy rate steady at a nearly seven-year low of 6.00 per cent on Wednesday, reflecting its concern consumer inflation could accelerate further after hitting a five-month high of 3.36 per cent in August.