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India’s Services PMI Hits One-Year Low in November

The Services Purchasing Managers’ Index (PMI) in India revealed a decline to 56.9 in November, marking a one-year low compared to October’s 58.4. However, the sector maintained its expansion streak for the 28th consecutive month, remaining above the crucial 50-point threshold that separates expansion from contraction.

Composite PMI Decline

  • The composite PMI also saw a one-year low at 57.4, down from October’s 58.4.
  • A steeper decline was mitigated by an increase in the manufacturing index, rising to 56.0 from the previous month’s eight-month low of 55.5.

Insight from Economic Analyst

  • Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, observed a loss of growth momentum in India’s service sector in the third fiscal quarter.
  • Despite the slowdown, there’s noted robust demand for services, driving new business intakes and output.

Demand and Output Dynamics

  • S&P Global’s survey data reveals a significant increase in the output of India’s services sector in November, surpassing long-run averages.
  • Sales received a boost from new client wins, demand strength, and favorable market conditions.

New Orders and Overseas Demand

  • Widespread slowdowns were observed in the increase of new orders, suggesting a potential area of concern.
  • Overseas demand for Indian services improved but at the slowest rate since June.

Employment and Job Growth

  • While there’s a positive net result on jobs with a gain in employment, the rate of job growth hit its lowest point since April, indicating potential challenges.

Economic Outlook

  • Despite fading optimism due to rising inflation expectations, the current rates of expansion in both services and manufacturing sectors are considered healthy.
  • The outlook for business activity remains bright, supported by strong demand for services.

Important Questions Related to Exams

Q: Why did India’s Services PMI fall to 56.9 in November?

A: Despite hitting a one-year low, it remained in expansion for the 28th consecutive month. The dip was partially offset by an uptick in the manufacturing index.

Q: What influenced the Composite PMI’s decline to 57.4?

A: The drop mirrored the Services PMI trend but was cushioned by the manufacturing sector’s improvement.

Q: What factors impact the services sector dynamics?

A: Resilient demand, new client acquisitions, and favorable market conditions drove output growth, despite a widespread slowdown in new orders.

Q: How does the global scenario affect Indian services?

A: Overseas demand increased but at the slowest rate since June, impacting job growth, which, while positive, was at its weakest since April.

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