India’s services sector, which contributes more than 50% to the country’s GDP, continued to show strength in November but expanded at a slower pace compared to the previous month, according to a private survey. The S&P Global India Services Purchasing Managers’ Index (PMI) dropped to 56.9 in November, down from October’s 58.4. This was below the expectations of analysts polled by Reuters, who had predicted a slight dip to 58.0.
Despite the dip, the index remained above the 50-mark that separates growth from contraction, maintaining a firm position.However, it was the slowest pace of expansion since November last year.
The survey’s new business sub-index, which is a key indicator of demand, fell for the second consecutive month, reaching its lowest level in a year in November. Additionally, the index measuring international demand dropped to a five-month low.Pollyanna De Lima, economics associate director at S&P Global, commented on the situation, stating that although India’s service sector has lost growth momentum, there is still robust demand for services driving new business and output. She added that despite fading optimism due to rising inflation expectations, the current rates of expansion in the sector are healthy when compared to long-run averages, and the outlook for business activity remains positive.
In November, overall business confidence declined to a four-month low, even though projections for output remained upbeat. The future activity sub-index was significantly below September’s nine-year high. As a result, firms increased their headcount at a slower pace, with hiring reaching a seven-month low.
Despite the dip, the index remained above the 50-mark that separates growth from contraction, maintaining a firm position.However, it was the slowest pace of expansion since November last year.
The survey’s new business sub-index, which is a key indicator of demand, fell for the second consecutive month, reaching its lowest level in a year in November. Additionally, the index measuring international demand dropped to a five-month low.Pollyanna De Lima, economics associate director at S&P Global, commented on the situation, stating that although India’s service sector has lost growth momentum, there is still robust demand for services driving new business and output. She added that despite fading optimism due to rising inflation expectations, the current rates of expansion in the sector are healthy when compared to long-run averages, and the outlook for business activity remains positive.
In November, overall business confidence declined to a four-month low, even though projections for output remained upbeat. The future activity sub-index was significantly below September’s nine-year high. As a result, firms increased their headcount at a slower pace, with hiring reaching a seven-month low.
While operating costs and prices charged to customers increased, the pace for both was the slowest since March. In October, retail inflation in India eased to 4.87%, reaching a four-month low. However, economists do not expect the Reserve Bank of India (RBI) to cut interest rates before the third quarter of next year.
On a positive note, the manufacturing PMI rose to 56.0 in November. However, the slowdown in services activity dragged down the overall S&P Global India Composite PMI Output Index to 57.4, the lowest since November last year.