By Michelle Alles
BIHAR (CWBN)_ The Purchasing Managers’ Index (PMI) has increased for the fifth consecutive month, but is still below its critical benchmark of 50.
Services, the largest contributor in GDP (Gross Domestic Products), increased slightly in September as the PMI rose for the fifth consecutive month. However, the current reading is still at 49.8, with a 0.2 needed to reach its appropriate total of 50.
The disadvantages of this are that while there could be a further cutback in new work and employment, if a good performance occurs in the manufacturing sector, private sector activity in the country has room for the advantage of expansion.
The service sector amounts to nearly 54 percent share in the Gross Domestic Product (GDP) and accounts for the maximum among the three sectors, namely, services, industry and agriculture. The India Services PMI is compiled by economic research agency IHS Markit based on responses to questionnaires sent to a panel of around 400 service sector companies. A diffusion index is calculated for each survey variable. With a variance between 0 and 100, the reading above 50 indicates an overall increase compared to the previous month, and a number below 50 indicates an overall decrease.
Commenting on the latest survey results, Pollyanna De Lima, Economics Associate Director at IHS Markit, said the relaxation of lockdown rules in India propelled the service sector to secure a recovery last month. The participants of the PMI survey indicated an overall business stability and a slight decline in new work intakes. Payroll numbers decreased further, but several firms reported that attempts to hire extra workers were hampered by a lack of available labour.
De Lima said that backlog data indicated that hiring efforts would continue in the near future. However, a better employment trend could be seen in the coming months provided that people were willing to leave their hometowns in search of vacancies.
