India’s services sector activity hits 3-month low in December: Study

The seasonally-adjusted India Services Business Activity Index fell from 58.1 in November to a three-month low of 55.5 in December. The rates of expansion moderated but were nevertheless “marked” by historical standards, the survey said.

For the fifth straight month, the services sector witnessed an expansion in output. In Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

“2021 was another bumpy year for service providers, and growth took a modest step back in December. Still, the latest readings pointed to robust increases in sales and business activity compared to the survey trend,” said Pollyanna De Lima, Economics Associate Director at IHS Markit.

Moreover, owing to the buoyant performances seen in October and November, the average growth rate for output over the third quarter of fiscal 2021-22 was the strongest since the three months to March 2011, Lima noted.

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.

On the employment front, the December data showed renewed job shedding in the service economy, but the rate of contraction was only slight. Firms generally suggested that employment levels were sufficient to cope with current workloads.