India’s services activity continued to expand in September, with the purchasing managers’ index (PMI) for the sector rising to 61.0 from 60.1 in August, according to data released by S&P Global on October 5.
At 61.0, the September services PMI remains significantly above the key level of 50 that separates expansion in activity from a contraction. In fact, the services PMI has been above 50 for 26 months in a row.
“The latest PMI results brought more positive news for India’s service economy, with September seeing business activity and new work intakes rising to one of the greatest extents in over 13 years. Besides demand strength domestically, firms noted higher international sales to Asia, Europe and North America,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.
The PMI is a survey-based indicator based on the responses of around 400 service companies. The sectors it covers includes non-retail consumer services, transport, information, communication, finance, insurance, real estate, and business services. An index is calculated for each sector, all of which are then combined to give an overall PMI figure.
Given that the PMI measures change in activity from the previous month and is seasonally adjusted, it is seen as a good indicator of the momentum in economic activity. Further, it is the most immediately available data point – PMI for any given month, both for the services and manufacturing sectors, is released in the first week of the subsequent month.
In comparison, official data on economic activity – such as the index of industrial production or the index of eight core industries – are released with a lag of a month or more. PMI data is seen as a lead indicator of the state of the economy and policymakers often rely on it to inform their decisions.
The latest services PMI data comes two days after S&P Global said the manufacturing PMI fell to a five-month low of 57.5 in September from 58.6 in August. As a result, the composite PMI – which is a combination of the manufacturing and services indices – edged up to 61.0 from 60.9 in August.