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India services PMI expands for second month; employment rises for first time in 9 months

India Services Business Activity Index expanded at 53.7 in November, indicated that economy remained on the right path to recovery, with a further upturn in new work supporting business activity growth and the first rise in employment for nine months

twitter-logoBusinessToday.In | December 3, 2020 | Updated 17:53 IST
India services PMI expands for second month; employment rises for first time in 9 months
India's services PMI expanded for the second straight month in November

India's services sector expanded for the second straight month in November, a monthly survey showed on Thursday. Meanwhile, employment in the sector rose for first time in nine months, albeit marginally. The overall level of positive sentiment climbed to the highest since February amid predictions that market conditions would normalise once a vaccine for the COVID-19 is rolled out, as per data released by the analytics firm IHS Markit.

As per the IHS Markit report, services firms hired additional workers in November, ending an eight-month sequence of job shedding, as some companies reported having sufficient staff to cope with current workloads.

The data showed that India Services Business Activity Index expanded at 53.7 in November despite falling from 54.1 in October. The latest reading, which remained above the critical 50 mark that separates growth from contraction, indicated that economy remained on the right path to recovery, with a further upturn in new work supporting business activity growth and the first rise in employment for nine months.

Besides, Indian private sector activity also rose for the third straight month in November, but the pace of growth softened from October's near nine-year high. The composite purchasing managers' index (PMI) output index was down from 58 to 56.3, a reading that was still consistent with a marked rate of expansion. Rates of increase eased at manufacturers and service providers.

"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," IHS Markit said.

Transport & Storage was the best-performing sector in November, with rates of growth for output and sales surpassing those seen in consumer services and finance & insurance. Information & Communication and Real Estate & Business Services saw reductions in new orders and activity.

The data showed that the upturn in total new work was driven by the domestic market, with new export orders decreasing sharply again in November. The latest fall in international sales, the ninth in consecutive months, was attributed to subdued global demand and travel restrictions.

Commenting on the latest survey results, Pollyanna De Lima, Economics Associate Director at IHS Markit, said: "The Indian service sector continued to recover from the coronavirus-induced contractions recorded from March through to September. Companies enjoyed a further rise in new work intakes and responded to this by lifting business activity and employment. The increase in jobs was marginal at best, but nevertheless the first since the onset of COVID-19. There was also an improvement in business confidence, which bodes well for employment over the coming months."

By Chitranjan Kumar

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