The business of companies in India is growing rapidly, new orders are being received and demand from foreign markets is also improving. However, the pace of new recruitment in companies has almost stopped. According to a Reuters report, India’s private sector business activity reached its highest level in four months in October, but employment was not affected much. Companies depend on existing employees rather than hiring new employees to handle the increased workload. In such a situation, the question arises that when the business is increasing, why are the job opportunities not increasing?

Business has reached its highest level in four months

It rose to 56.7 in October, according to the Flash India Composite Purchasing Managers’ Index prepared by HSBC in association with S&P Global. This figure was 55.9 in September. Economists polled by Reuters had expected it to be 56.1. The actual figure was higher than this estimate.

PMI indicates the business activities of companies and changes in them. Its value above 50 is a sign of growth in business and its value below 50 is a sign of decline. The index, which reached 56.7 in October, shows that business activities in India’s private sector are picking up. However, this level remains below this year’s average.

The service sector became the main reason for the boom in business

The services sector played an important role in boosting private sector activity in October. Its PMI rose to 56.2 in October from 55.2 in September. The increase in new orders has strengthened business activities in this sector. This means that companies are getting work and the demand for services has also improved.

On the other hand, production in the manufacturing sector increased, but at a slightly slower pace. Manufacturing PMI fell to 54.9 in October from 55.1 in September. This shows that although business activities have increased in both the sectors, their pace has not been the same.

Business increased, but why did new hires stop?

The most important aspect of the report is related to employment. Private sector employment was almost flat in October. Along with this, the continuous increase in new recruitment for nine months has also stopped. The companies say that the existing workforce is sufficient to handle the increased work.

That is, despite receiving more orders and increasing business, the companies did not feel the need for new employees. The pace of hiring in the manufacturing sector also slowed, impacting the overall PMI for this sector.

According to the report, the backlog of pending work with the companies has also reduced. The pace of decline in private sector backlog is the fastest in nearly six-and-a-half years. This means that the companies were able to complete their work with the help of the already present employees. In such a situation, the direct effect of increase in orders is not reflected in new jobs.

How much does a business boom affect employment?

October figures show that demand and business activity in India’s private sector are strengthening, but the benefits are not reflected in the same proportion in new hires. Companies are handling increased work with the help of existing employees and are also clearing pending orders faster.

In such a situation, the distinction between business growth and employment becomes important. The increase in production and orders by companies is a positive sign for the economy, but without an increase in employment opportunities, the big question is how quickly the benefits will reach the job-seeking youth.