India’s service sector continued to strengthen at 58.1 in November, stated the Services Purchasing Managers' Index, compiled by IHS Markit. PMI for services activity was marginally down to 58.1 in November from 58.4 in October, marking the second-fastest rise in output since July 2011.
“Posting 58.1 in November, down only fractionally from 58.4 in October, the seasonally adjusted India Services Business Activity Index pointed to the second-fastest rise in output since July 2011. According to monitored companies, the upturn reflected sustained increases in new work and ongoing improvements in market conditions,” IHS Markit stated.
A substantial upturn in new orders drove the service sector’s growth. Input costs rose at the second-strongest pace in nearly 10 years, while the rate of charge inflation softened from October's recent high.
“Although companies forecast higher business activity volumes over the course of the coming year, the expansion is expected to be restricted by price pressures,” the report stated.
IHS Markit stated that while business confidence improved to a three-month high in November, the overall level of positive sentiment was below its long-run average. While many expected demand to trend higher, many anticipated higher inflation to dampen recovery.
“Amid reports of higher fuel, labour, material, retail and transportation costs, average input prices among Indian services companies rose further in November. The overall rate of inflation quickened from October and was the second-strongest in almost a decade, behind April,” stated the report.
Service providers were able to comfortably accommodate rising business inflows. Backlogs fell for the fourth month running in November.
“Finally, 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,” it stated.
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