India Services PMI Jumps to 59.8; Domestic Demand Powers Growth

According to the HSBC India Services Purchasing Managers Index (PMI) compiled by S&P Global, the seasonally adjusted index rose to 59.8 in November from 58.9 in October, signaling a “historically sharp” expansion in output and the index remaining well above the neutral level. A reading above 50 indicates economic expansion, while a reading below 50 indicates contraction in the manufacturing or construction sectors.
Commenting on the survey, HSBC India chief economist Pranjul Bhandari said India’s services PMI business activity index rose to 59.8 in November, thanks to strong new business hiring that supported output growth. “Employment growth remained moderate, with most companies reporting no change in payroll figures,” Bhandari said.

“Optimism for the year ahead faded in November due to concerns about competition and potential disruption from state assembly elections. However, firms are still forecasting production increases, with positive sentiment linked to positive demand, greater social media presence, marketing initiatives and plans to keep price increases to a minimum,” Bhandari said. he said.

International sales continued to rise as companies reported earnings from Asia, Europe and the Middle East, according to the survey. “However, the pace of expansion fell to its lowest level in eight months,” the survey report said, adding that fierce international competition and the supply of cheaper services elsewhere were restricting growth.

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

The survey also noted that on the employment front, although more jobs were added to India’s services economy in November, the growth rate was moderate and broadly similar to those seen in the previous two months.