Home / Economy / India November services PMI hits three-month high of 56.4 on strong demand

New Delhi: India’s services activity continued to rise in November, recording fastest output growth in three months, with new orders accruing at highest pace since August, a private survey showed on Monday.

The Purchasing Managers‘ Index (PMI) for the services sector, released by credit rating agency S&P Global, improved to 56.4 in November from 55.1 in October, as the survey showed an expansion in output and job creation.

“Private sector activity in India increased for the 16th consecutive month in November, and at the fastest pace since August," the survey said.

A reading above 50 indicates expansion in activity, while a sub-50 print is a sign of contraction.

“New business inflows rose markedly and at the quickest pace in three months, supporting a sharp expansion in output and further job creation. There was another substantial increase in input costs, the second-fastest since July, which underpinned the strongest upturn in selling charges in just under five-and-a-half years,“ S&P Global said.

“New orders placed with service providers in India rose for the sixteenth consecutive month in November. The rate of expansion was marked and the fastest since August," it added.

November data showed the first upturn in new business from abroad since the onset of Covid-19 in early-2020. That said, the overall rate of expansion was mild.

“Indian service providers continued to reap the benefits of strong domestic demand, with PMI data for the penultimate month of 2022 showing faster increases in new business and output. Moreover, expectations of demand buoyancy in the medium-term promoted further job creation," said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.

On the prices front, services companies across India again reported higher operating expenses midway through the third fiscal quarter. In addition to greater transportation costs, firms mentioned higher prices for energy, food, packaging, paper, plastic and electrical products. Little-changed from October, the overall rate of inflation was marked and above its long-run average.

“Whilst on the whole the latest results are encouraging, the trend for inflation is somewhat concerning. Strong demand for services again boosted firms‘ pricing power, with more companies transferring cost increases to their customers," De Lima added.

The overall upturn in input costs was sharp and little-changed from October, while output charges rose at the quickest rate in over five years.

“Evidence of stubborn inflation may prompt further hikes to the policy rate at a time when global economic challenges could negatively impact India’s growth," Lima added.

Meanwhile, the S&P Global India Composite PMI Output Index -- which measures combined services and manufacturing output -- rose from 55.5 in October to 56.7 in November.

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