India's service sector recovery weakens in November: PMI

India's services sector recovery weakened in November despite further upturn in new work supported business activity growth.

However, the sector reported the first rise in employment for nine months.

Moreover, the overall level of positive sentiment climbed to the highest since February amid predictions that market conditions would normalise once a vaccine for the coronavirus disease 2019 (Covid-19) is rolled out.

Accordingly, the seasonally adjusted India Services Business Activity Index reading remained above the critical 50 mark that separates growth from contraction for the second month in a row during November.

Despite falling from 54.1 (index reading) in October to 53.7 (index reading) in November, the latest reading was still indicative of a solid pace of expansion.

Companies that signalled output growth commented on better demand conditions and a relaxation of Covid-19 restrictions.

"New business inflows likewise rose for the second straight month and solidly, despite growth easing from October. According to survey participants, the increase in sales stemmed from a pick-up in demand, marketing efforts and the loosening of Covid-19 controls," the IHS Markit report said.

"Underlying data suggested that the upturn in total new work was driven by the domestic market, with new export orders decreasing sharply again in November."

Resultantly, the overall Indian private sector activity rose for the third straight month in November, but the pace of growth softened from October's near nine-year high.

The report said that rates of increase eased at manufacturers and service providers.

Both goods producers and services firms registered slower increases in sales.

As per reading, the Composite PMI Output Index was down from 58 in October to 56.3 November, a reading that was still consistent with a marked rate of expansion.

"Output and sales across the private sector have held up well, but there were some signs of growth losing momentum among goods producers and service providers. As has been the case in most nations worldwide, the manufacturing sector outperformed its services counterpart as the latter was hit harder by the Covid-19 pandemic," said Pollyanna De Lima, Economics Associate Director at IHS Markit.

"When reporting growth constraints, travel restrictions and low footfall as consumers opt to stay home and avoid catching the disease remained key themes of the services PMI survey."

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