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Services sector grows for second straight month, but rate falls in Nov: PMI

Hiring reverses declining trend, services inflation accelerates

Services PMI | Manufacturing PMI

Indivjal Dhasmana  |  New Delhi 

Photo: Reuters
Service providers suggested that disruptions caused by the Covid-19 pandemic exerted upward pressure on operating capacities during November.s

Services activity — the biggest sector of India’s economy — saw growth easing in November, but the index remained in expansion zone for the second month after seven months of continuous decline, a private survey showed on Thursday.

The widely tracked IHS purchasing managers’ index (PMI) showed employment rose for the first time in nine months as domestic demand remained strong, while that from overseas markets declined.

The index declined to 53.7 in November from 54.1 in October. In the PMI lexicon, any reading above 50 denotes expansion, while a print below that is contraction.

A day ahead of monetary policy announcement by the RBI, the commentary associated with PMI said the rate on both the input and output side in services accelerated in November.

“Low interest rates aimed at mitigating the negative impacts of Covid-19 on the economy and the latest rise in services employment are supportive factors for domestic demand. However, a pick-up in inflationary pressures could threaten recovery,” said Pollyanna De Lima, economics associate director at IHS Markit.

Companies hired additional workers, a first in nine months, but net recruitment remained moderate.


It said the latest reading was still indicative of a solid pace of expansion. “Companies that signalled output growth commented on better demand conditions and a relaxation of Covid-19 restrictions,” it said.

Sub-sector data highlighted transport and storage as the best performing category in November, with rates of growth for output and sales surpassing those seen in consumer services, and finance and insurance. Information and communication, and real estate and business services saw reductions in new orders and activity.

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, for the ninth consecutive month, was attributed to subdued global demand and travel restrictions, the commentary said.

On Wednesday, official trade data also showed merchandise exports declined in November over 9 per cent, sharper than 5 per cent in October.

Together with manufacturing activities, private sector activity rose for the third straight month, but the pace of growth softened from October’s near nine-year high.

The Composite PMI Output Index was down from 58 to 56.3, a reading that was still consistent with a marked rate of expansion.

Looking ahead, firms were confident of a rise in business activity in the coming 12 months. The overall degree of optimism improved to a nine-month high.

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First Published: Thu, December 03 2020. 12:07 IST