Services industry bounces back after four months, PMI rises to 50.3

Owing to slow recovery in demand, India's services industry bounced back in February after a four-month low, showed a private business survey.

The Nikkei/IHS Markit Services Purchasing Managers' Index (PMI) rose to 50.3 in February, crossing the 50-mark divider between growth and contraction.

In November, after the demonetisation drive, the index fell to a near-three-year low, because of 86% cash flowing out of circulation.

As manufacturing production grew, the seasonally adjusted Nikkei India Composite PMI Output Index rose from 49.4 in January to 50.7 in February.

However, Pollyanna De Lima, economist at IHS Markit and author of the report said that one can’t take it as a guarantee that expansion rates will climb to their trend levels in the near term.

"Companies remain reluctant to take on additional staff and confidence towards the 12-month outlook for output dipped to its second-lowest mark in over one year. These factors indicate that, so far, firms are doubtful about the sustainability of the economic recovery," De Lima told ET.

(Image source Saint Gobain)