Mumbai: Rising cost pressure, along with the after effects of the Goods and Services Tax (GST), dragged the output of Indian service sector lower during November, a key macro-economic data showed on Tuesday.
According to the seasonally adjusted Nikkei India Services PMI Business Activity Index, the service sector’s output dipped into contraction territory during November following a growth in the previous two months.
“Panellists widely blamed the deterioration in business performance to GST. Meanwhile, cost pressures intensified during the latest survey period,” the PMI report said.
Subsequently, the seasonally adjusted index registered an overall decline below the no-change mark of 50 in November 2017. An index reading of above 50 indicates an overall increase in economic activity and below 50 an overall decrease.
The impact of lower Services PMI further subdued the overall private sector’s output during November.
Consequently, the seasonally adjusted Nikkei India Composite PMI Output Index fell sharply from 50.3 in June to 51.3 in November.
“Following modest growth in the previous two months, hopes of a sustained recovery in November waned as marked growth in the manufacturing sector was broadly offset by a downturn in the service sector,” said Aashna Dodhia, economist at IHS Markit and author of the report.
“Business under-performance emanated from July’s GST which contributed to sluggish demand and lower customer turnout, according to anecdotal evidence.”