economy

Indias services PMI for December falls to 3-month low amid resurgent Covid

Indias services PMI for December falls to 3-month low amid resurgent Covid

The Indian services sector witnessed a decline in its growth rate in December, even as the momentum of expansion continued – a new report has noted. The IHS Markit India Services Purchasing Managers’ Index (PMI) for December released on Wednesday stood at a three-month low of 55.5, down from a reading of 58.1 in November. The decline in the growth rate comes amid a rise in covid cases across the country along with the fast spread of the Omicron variant of the virus. The statement by IHS Markit, however, said that the seasonally adjusted India Services Business Activity Index was still consistent with a marked rate of economic expansion. The upturn was often associated with improving market conditions and accommodative demand, it said. In terms of PMI, a reading of 50 and above refers to expansion in the concerned sector and a score below 50 denotes contraction. Indian services companies continued to report growth of sales and business activity in December. Rates of expansion moderated, but were nevertheless marked by historical standards, it said. Underlying data suggested that the latest increase in new orders was centred on the domestic market, as new business from abroad fell further. The deterioration in international demand was linked to COVID-19 restrictions, particularly around travelling. December data showed renewed job shedding in the service economy, but the rate of contraction was only slight. In fact, the vast majority of surveyed companies (96%) left payroll numbers unchanged from November. Service providers reported a further increase in expenses during December. Anecdotal evidence highlighted higher prices for chemicals, food, fuel, medical equipment, office products, tools and transportation. Although sharp and above its long-run average, the overall rate of inflation softened to a three-month low. Amid reports of rising expenses, prices charged for the provision of services in India increased at the end of 2021. The rate of charge inflation, however, was moderate, below trend and the weakest since September. Business confidence strengthened during December, to a 4-month high, but sentiment remained subdued in the context of historical data. Some firms foresee further improvements in demand and expect marketing efforts to bear fruit. Others were concerned that the recovery could be dampened by price pressures and potential new waves of covid-19. Download.

economy 2022-01-05 Livemint