NEW DELHI, NOV 3: Led by a steep rise in new orders, the services sector activity is estimated to have grown at a sharp pace in October.

The Nikkei Services Business Activity Index rose to 54.5 in October from 52 in September. New business rose in five of the six sectors it tracks, with the only exception being hotels and restaurants.

“Boosting output growth was a pick-up in new orders, which expanded at a solid pace that was faster than in September. According to panellists, the upturn was supported by greater client requests and improved demand conditions,” Nikkei said in a statement on Thursday.

A reading above 50 on the index reflects expansion while one below 50 denotes contraction.

With both the manufacturing and service sectors’ production gathering pace, the Nikkei India Composite PMI Output Index rose to 55.4 in October from 52.4 in September, marking its sharpest growth in four years.

“A healthy level of overall positive sentiment regarding future business opportunities was seen and, with competitive pressures offering just a minor bump in the road of confidence, the services economy looks set to maintain its strong performance in the near term,” said Pollyana de Lima, economist at IHS Markit, and author of the report.

Hiring still stagnant

She, however, raised concern over the stagnant trend in workforce hiring, and expressed hope that the added pressure on capacity would translate into job creation by the end of the year. The survey noted that service sector employment was unchanged over the month, with all the participants reporting the same payroll numbers as in September.

Despite a rise in average input prices due to higher prices of petrol, cost inflation eased and helped service providers with their pricing strategies.

The survey also found that services companies remained upbeat towards the 12-month outlook for activity, but the overall level of sentiment was at a four-month low. “Worries regarding fierce competition for new work restricted confidence,” it said.