Services PMI Expands At Second-Fastest Pace In Over A Decade
The India Services Business Activity Index stood at 58.1 in November compared with 58.4 in October.
A gauge of India’s services sector expanded as new orders picked up and market conditions improved.
The India Services Business Activity Index, compiled by IHS Markit, stood at 58.1 in November compared with 58.4 in October, according to a media statement. A reading above 50 indicates expansion in business activity.
The recovery of the Indian services sector was extended to November, with a robust improvement in sales enabling the second-fastest rise in business activity in nearly ten-and-a-half years.Pollyanna De Lima, Economics Associate Director, IHS Markit
The Composite PMI Output Index, too, rose to 59.2 from 58.7 in the preceding month.
New business rose at a broadly similar rate to that in October. Successful marketing, strengthening demand and favourable market conditions aided sales growth, the statement said.
Although companies forecast higher business activity volumes over the course of the coming year, the expansion is expected to be restricted by price pressures.
Amid reports of higher fuel, labour, material, retail and transportation costs, average input prices rose further in November. The overall rate of inflation quickened from October, and was the second-strongest in almost a decade.
While a few firms transferred higher input costs through to their clients by lifting selling prices, majority kept their fees unchanged from October. As a result, output charges rose at a slower rate than in the prior month.
Backlogs fell for the fourth month running in November, albeit marginally. This general lack of pressure on capacities meant that employment levels were little-changed from October, with the respective index edging closer to the critical 50.0 threshold.
The Covid-19 pandemic and travel restrictions reportedly caused a further drop in international demand for Indian services. The latest fall in external sales was the twenty-first in successive months, although among the slowest over this period.
Although business confidence improved to a three-month high in November, the overall level of positive sentiment was well below its long-run average. Some companies expect demand to continue to trend higher, but several others were worried that elevated inflation could dampen the recovery.