The Indian services economy remained on the right path to recovery during November with a further upturn in new work supporting business activity growth and the first rise in employment for nine months, according to the latest IHS Markit Services Purchasing Managers’ Index (PMI) released on Thursday. 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. Meanwhile, rates of inflation for input costs and output charges accelerated, both of which outpacing their respective long-run averages. The seasonally adjusted India Services Business Activity Index posted above the critical 50 mark that separates growth from contraction for the second month in a row during November. Despite falling from 54.1 in October to 53.7, the latest reading was still indicative of a solid pace of expansion. Companies that signalled output growth commented on better demand conditions and 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 PMI results for November showed the strongest increase in service sector input costs for nine months, which brought in the sharpest upturn in fees for over three years,” said Pollyanna De Lima, Economics Associate Director at IHS Markit. “Companies enjoyed a further rise in new work intakes and responded to this by lifting business activity and employment,” she said in a statement. 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. The latest fall in international sales, the ninth in consecutive months, was attributed to subdued global demand and travel restrictions. Private sector companies noted a marked, albeit softer, upturn in new business inflows. Both goods producers and services firms registered slower increases in sales. The IHS Markit India Services PMI is compiled from responses to questionnaires sent to a panel of around 400 service sector companies. The sectors covered include consumer (excluding retail), transport, information, communication, finance, insurance, real estate and business services. The panel is stratified by detailed sector and company workforce size based on contributions to GDP. IHS Markit is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government.
