Oct services industry PMI at 8-month high on boost from new business

October services industry PMI at 8-month high

The services industry expanded at its fastest pace in eight months in October as new business rose with discounting probably stoking demand, a survey showed on Wednesday.

The survey results are likely to provide some comfort to policymakers after a sister survey on Monday showedmanufacturing growth cooled to a 22-month low in October.

The Nikkei/Markit Services Purchasing Managers’ Index rose to 53.2 in October from September’s 51.3, marking a fourth month above the 50-level that separates growth from contraction.

Growth was underpinned by a surge in new business, which hit its highest since February.

But the improved activity came as firms cut prices again in October – the second month in a row companies have had to resort to discounting to drum up new business.

A sub-index measuring prices charged was 49.6, just marginally higher than the previous month’s 49.5.

The last time firms reported cutting prices in consecutive months was in early 2009, when overall business activity was below-50 levels.

“Services companies saw a faster rise in new business than their manufacturing counterparts, with data implying that price discounts supported growth of new projects,” said Pollyanna De Lima, economist at Markit.

Lower prices charged to consumers will probably help further cool retail inflation, currently at 4.41 per cent.

The Reserve Bank of India, however, is not expected to ease policy anytime soon after it cut the benchmark lending rate four times since January, most recently in September, in an effort to boost growth.

Firms reported no change in payrolls, with no new job additions being made since July.