Service sector

India’s services sector sees weak expansion in December; Services PMI falls to 3-month low

India’s seasonally adjusted index of services business activity fell to a low of 55.5 in December, according to IHS Markit, from 58.1 the previous month.

India’s services sector experienced slow expansion in December, with the services PMI falling to its lowest level in three months, continuing the trend of a bumpy year, according to a survey by IHS Markit. India’s seasonally adjusted index of services business activity fell to a low of 55.5 in December from 58.1 the previous month, hurt by price pressures and the possibility of further waves of COVID-19 , said IHS Markit.

“2021 was another eventful year for service providers and growth eased slightly in December. Still, the latest readings indicated robust increases in sales and business activity relative to the survey’s trend,” Pollyanna De Lima, associate director of economics at IHS Markit, said in the note. Even though business confidence strengthened during December, overall sentiment remained subdued against the backdrop of historical data, the report noted.

According to the latest data from IHS Markit, the expansion of new orders for service providers was largely domestically focused as international demand fell due to COVID-19 related restrictions, particularly on trips.

India’s services sector also saw another drop in employment figures in December, although the rate of contraction was mild, with the majority of companies surveyed leaving payroll figures unchanged from November. “The uncertainty surrounding the outlook and the general lack of capacity pressure led to a further decline in employment in December. That said, the decline was marginal and a recovery is expected this year if demand for services remains supportive,” IHS Markit said.

The composite production PMI, which measures both services and manufacturing, slipped to 56.4 in December from 59.2 in November, although it remained above its long-term average. term of 53.9. Manufacturers saw a bigger increase in sales than service providers, while cost inflation was more pronounced in the service sector than in manufacturing, the survey noted.

The report notes, however, that business confidence improved among producers of goods and providers of services at the end of 2021 and that some companies expect further improvements in demand. However, high price pressure and surging COVID-19 cases persist and some other companies expect the recovery to slow.

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