India's services PMI falls to 56.9 in November, lowest in 2023 so far

S&P Global said that the slowdown in services PMI was mainly owing to a slowdown in new orders as well as output across sectors

India's service sector activity expanded at its lowest pace in November, according to a private survey released on Tuesday. According to S&P Global, India's services Purchasing Managers' Index (PMI) in November fell to 56.9 as compared to 58.4 in October. This is the lowest figure in 2023 so far. Before this, services PMI was recorded at 57.2 in January. 

A reading above 50 shows the sector expanded, while below it signifies contraction. 

The rating agency said that the slowdown was mainly owing to a slowdown in new orders as well as output across sectors. The anticipation of rising inflation also curbed the enthusiasm. 

Granular data showed widespread slowdowns in rates of growth for both new orders and output across the four broad areas of the service economy. "Finance & Insurance topped the rankings, while Real Estate & Business Services came last," S&P said.

Moreover, for international demand, new export orders grew at their slowest pace since June. 

According to S&P, Indian services firms endured a further increase in their operating expenses, with labour, food, material and transportation costs reportedly rising since October.  

"India's service sector has lost further growth momentum midway through the third fiscal quarter, but we continue to see robust demand for services fuelling new business intakes and output," said Pollyanna De Lima, Economics associate director at S&P Global Market Intelligence. 

However, there was some relief for service providers with input price inflation receding to the lowest in eight months. 

"Fewer companies hiked their own fees as a result, an aspect that might provide a further boost to demand as 2023 draws to a close," De Lima added. 

In the long-term, the outlook of the service sector continues to be positive.  

"The current rates of expansion look very healthy when considering their respective long-run averages and the outlook for business activity remains bright in spite of optimism fading due to rising inflation expectations," De Lima said.