The seasonally adjusted India Services Business Activity Index showed an increase that ended a seven month sequence of reduction.
The index rose to 54.1 in October, up from 49.8 in September.
Besides, the seasonally adjusted business activity index posted above the 50 (index reading) no-change mark the first time since February.
An index reading above 50 indicates an overall increase compared to the previous month, and below points to an overall decrease.
“The latest reading pointed to a solid rate of growth in output that was stronger than its long-run average,” the IHS Markit report said.
As per the report, panel members said the upturn was supported by improved market conditions amid the loosening of Covid-19 restrictions.
Furthermore, the survey report said that October recorded the strongest increase in private sector output in close to nine years.
“A sharp rise in factory production was accompanied by a return to growth of services activity,” the report said.
The Composite PMI Output Index rose from 54.6 in September to 58 in October.
“Aggregate new orders expanded for the second straight month in October, with the rate of growth accelerating to the highest since January 2013.
“New business at manufacturing firms increased at a quicker pace than at their services counterparts.”
However, companies in both the manufacturing and the service sectors recorded lower payroll numbers at the start of the third quarter of fiscal year 2020-21.
As a result, the report pointed out that private sector employment declined for the eighth straight month.
According to Pollyanna De Lima, Economics Associate Director at IHS Markit: “It’s encouraging to see the Indian service sector joining its manufacturing counterpart and posting a recovery in economic conditions from the steep deteriorations caused by the Covid-19 pandemic earlier in the year.”
“While a revival of the manufacturing industry began in August, only now the service sector started to heal. Service providers signalled solid expansions in new work and business activity during October. They were also more upbeat about the outlook, though hopes of output growth in the year ahead were pinned on a Covid-19 vaccine.”