The service sector saw an increase in production for the fifth consecutive month. In Purchasing Managers Index (PMI) parlance, a print above 50 indicates expansion, while a score below 50 indicates contraction.
India’s services sector activity eased in December as business activity and sales grew at a softer pace, while price pressures and new waves of COVID-19 hit business sentiment, a monthly survey said on January 5.
The seasonally adjusted India Services Business Activity Index fell from 58.1 in November to a three-month low of 55.5 in December. The survey said expansion rates moderated but still “marked” by historical standards.
The service sector saw an increase in production for the fifth consecutive month. In Purchasing Managers Index (PMI) parlance, a print above 50 indicates expansion, while a score below 50 indicates contraction.
“2021 was another difficult year for service providers, and growth took a slight step back in December. Nevertheless, the latest readings pointed to stronger growth in sales and business activity than survey trends,” said Pollyanna de Lima, associate director of economics at IHS Markit.
In addition, due to the encouraging performance seen in October and November, the average production growth rate in the third quarter of FY 2021-22 was the strongest in the three months to March 2011, Ms. Lima said.
The underlying data suggested the latest increase in new orders was focused on the domestic market, as new business from overseas declined further. The decline in international demand was linked to COVID-19 restrictions, especially around travel.
On the employment front, December data showed renewed job losses in the service economy, but the rate of contraction was only modest. Firms generally suggested that employment levels were sufficient to cope with the current workload.
“Uncertainty around the outlook, and a general lack of pressure on capacity, led to a fresh decline in employment during December. That said, the decline was modest, and conditions for services demand to remain favorable are expected to improve this year. It is,” said Ms. Lima.
Business confidence strengthened to a four-month high during December, but sentiment remained weak in terms of historical data.
Some firms expect further improvement in demand and expect the marketing efforts to bear fruit. Others were concerned that price pressures and a possible new wave of COVID-19 could curtail the recovery.
Ms Lima said that encouragingly, inflationary pressures in the service economy showed signs of easing towards the end of 2021, as both input costs and output tariffs grew at their slowest rates in three months.
The overall PMI output index – which measures combined services and manufacturing output – fell from 59.2 in November to 56.4 in December, but remained above its long-run average of 53.9, as both manufacturing output and services activity grew at a slower pace. , although historically strong, rates.
The December data pointed to a broad fall in employment of goods producers and service providers. At the overall level, jobs decreased for the first time in four months.
A total of 2,135 cases of omicron type coronavirus have been detected in 24 states and union territories, of which 828 have been cured or migrated, according to the Union Health Ministry data updated on January 5.
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