India’s Services PMI Signals Expansion Before RBI Rate Decision

(Bloomberg) -- Sign up for the New Economy Daily newsletter, follow us @economics and subscribe to our podcast.

Activity in India’s services signaled expansion for a second straight month as the country eased restrictions amid a decline in virus cases, a survey showed Tuesday. 

The IHS Markit India Services Purchasing Managers’ Index eased to 55.2 last month, from 56.7 in August, the second month in a row above the 50 threshold between expansion and contraction. 

A sustained expansion in the sector that makes up more than half of India’s economy bolsters expectations that the nation could grow at the quickest pace among major economies this year. 

A separate survey of factory managers last week showed India’s manufacturing activity rose to 53.7 in September -- the third month of expansion -- as production across Asia rebounded after Covid-19’s grip on several countries loosened. Services and manufacturing numbers together held the composite index to 55.3 last month, from 55.4 in August.

The data comes ahead of the central bank’s monetary policy announcement on Oct. 8. A pick up in economic activity will lower pressure on India’s inflation-targeting central bank to keep the rates on hold for longer to aid recovery.

©2021 Bloomberg L.P.