Graphic: Prajakta Patil/Mint
Graphic: Prajakta Patil/Mint

Composite PMI: Indian private sector output contracts in November

The Nikkei India Composite PMI Output index fell to 49.1 in November from a near-four-year-high of 55.4 in October

India’s private sector activity contracted in November, as a result of the currency demonetisation. The Nikkei India Composite PMI Output index, a gauge of private sector activity, fell to 49.1 in November from a near-four-year-high of 55.4 in October.

A reading below 50 signifies contraction from the previous month, while one above 50 indicates expansion. While the manufacturing sector continued to expand, albeit with reduced momentum, the services sector contracted sharply in November. The Nikkei India Services Business Activity index, which measures activity in the services sector, fell to 46.7 in November from 54.5 in October. New business inflows and output at services firms contracted for first time in 17 months.

While businesses expect the impact of the demonetisation to be short-lived, Pollyanna De Lima, economist at Markit, said: “The latest set of gloomy PMI figures for the Indian service sector shows that companies were heavily impacted by the 500 and 1,000 rupee notes ban. Cash shortages resulted in fewer new business intakes, which in turn caused a fall in activity and ended a 16-month sequence of expansion."

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