India Services PMI Jumps to 59.8; Domestic Demand Powers Growth

According to HSBC India Services Purchasing Managers’ Index (PMI) compiled by S&P Global, the seasonally adjusted index rose to 59.8 in November, up from 58.9 in October, signalling a ‘historically sharp’ expansion in output and the index stayed well above the neutral mark. A reading above 50 indicates economic expansion, while one below 50 shows contraction in the manufacturing or construction sectors. 
Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC said that India's services PMI business activity index rose to 59.8 in November, driven by robust new business intakes that fuelled output growth. “Employment growth remained modest, with most companies reporting no change in payroll numbers,” Bhandari said.

“The year-ahead optimism waned during November amid concerns about competition and potential disruptions from state assembly elections. Firms still foresee output growth, however, with positive sentiment linked to favourable demand, a greater social media presence, marketing initiatives, and plans to keep price increases to a minimum, Bhandari added. 

As per the survey, international sales continued to improve, as firms reported gains from Asia, Europe and the Middle East. “However, the rate of expansion retreated to an eight-month low,” the survey report said, adding that fierce international competition and the supply of cheaper services elsewhere constrained growth.

“International sales expanded at an eight-month low due to fierce overseas services competition. Besides, input price inflation reached its lowest rate in nearly five-and-a-half years, resulting in negligible increases in selling charges,” Bhandari said.

The survey further said that on the employment front, although more jobs were added to India’s service economy in November, the rate of expansion was moderate and broadly similar to those seen in the previous two months.