India's services sector activities witnessed an upturn in October on the back of stronger gains in new business and increased hiring amid strengthening demand, a monthly survey said on Thursday.

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The seasonally adjusted S&P Global India Services PMI Business Activity Index rose from September's six-month low of 54.3 to 55.1 in October, pointing to a quicker and marked rate of growth.

India October Services PMI rises to 55.1 from previous month’s level of 54.3. The headline figure is above the neutral 50 threshold for the fifteenth month running and outpaced its long-run average#ServicesPMI #PMI pic.twitter.com/4BAYquJGQB

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The headline figure was above the neutral 50 threshold for the fifteenth straight month. In Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion while a score below 50 denotes contraction.

"The October results show us that service providers had no trouble securing new work in October, despite lifting their charges again. Hence, the sector remained firmly inside expansion territory as business activity and payroll numbers were raised to support strengthening demand," Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said.

According to the survey, the domestic market was the main source of new business gains, as foreign sales decreased further at the start of the third fiscal quarter. "Monthly deteriorations in international demand have been registered since the onset of COVID-19 in March 2020," it noted.

Ongoing increases in new business and output requirements continued to support job creation in the service economy. Employment rose for the fifth month in a row and at the second-fastest pace in more than three years.

Optimistic growth projections also boosted job creation in October, with 30 per cent of survey members forecasting higher volumes of business activity by October 2023. Overall, confidence was at its highest level in just under eight years.

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"Buoyed by the ongoing recovery in new work, service providers again took on extra staff, with an improvement in business confidence also supporting hiring activity," the survey said.

On the inflation front, the survey said there were mild accelerations in inflation rates for input costs and output charges.

"Many companies indicated that higher food, fuel and retail prices pushed up their overall expenses in October. With some of this additional cost burden shared with customers, prices charged for the provision of services likewise rose," Lima said.

At the sub-sector level, consumer services led growth of business activity, new orders and employment. Finance & insurance came in second place in the rankings for these three measures while transport, information & communication was at the bottom.

Meanwhile, the S&P Global India Composite PMI Output Index — which measures combined services and manufacturing output — rose to 55.5 in October from 55.1 in September, pointing to a marked rate of expansion that outpaced its long-run average.

India October #CompositePMI rises to 55.5 from previous month’s level of 55.1. At 55.5 in October, the Composite PMI Output Index points to a marked rate of expansion that outpaced its long-run average pic.twitter.com/Eawr8IhwSo

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"There was a mild acceleration in growth of private sector activity in India, as a stronger increase in the service economy more than offset a slowdown among goods producers," it added.

The S&P Global India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies. The panel is stratified by detailed sector and company workforce size, based on contributions to GDP. Data collection began in December 2005.

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