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Services growth at 7-month high

business Updated: Oct 05, 2012 01:21 IST
HT Correspondent
HT Correspondent
Hindustan Times
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Riding on firm demand, India's resilient services sector registered high growth in September, a survey by HSBC has found.

HSBC's Purchasing Managers' Index (PMI) for September for the services sector, which was released on Thursday, has moved up to 55.8 from 55.0 in August, registering the fastest pace of growth in seven months.

Since November 2011, the index has remained above 50.0, indicating expansion.

"The services sector grew at a faster clip in September led by firm demand, underscoring the resilience of the service sector," HSBC's chief economist for India and ASEAN Leif Eskesen said in the report.

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New orders have significantly expanded in September - also the fastest in seven months.

The HSBC India Composite Output Index, comprising both services and manufacturing activity, stood at 55.0 in September, up from 54.3 in August, indicating further improvement in private sector.

Analysts said too much should not be read into the report. "Though this is a positive sign, but to draw conclusions that we are already in recovery mode may not be wise," said DK Joshi, chief economist, Crisil. "We need to wait and watch."

The report however warned that pressures on inflation have "firmed" again due to rising costs, at a time when the Reserve Bank of India (RBI) has limited room for rate cuts.

"Further progress on fiscal consolidation and structural reforms may eventually pave the way for some easing," Eskesen said in the report.

In the last one month, the government has announced several reform measures including allowing foreign direct investment in multi-brand retail and aviation sectors and increasing prices of diesel and LPG.

The report found that more jobs were created in the private sector in September.