India’s Services PMI Dips To 1-Year Low At 56.9 In November: S&P Global

The survey found that service companies stopped hiring to some extent as outstanding business among service firms remained majorly at stable levels.

The services sector in India saw its growth fall to one-year low in November owing to muted expansions in new work intakes and output, even as price pressures receded, a survey revealed on Tuesday.

The seasonally adjusted S&P Global India Services Business Activity Index slipped from 58.4 in October to 56.9 in November, marking the lowest level in 2023 so far, reported PTI. The survey by the rating agency found that even after logging a decline on a month-on-month basis, the expansion rate remained stronger than the long-run average. 

In the Purchasing Managers’ Index (PMI), a reading above 50 indicates expansion, while one below 50 means contraction. Notably, the survey is prepared after putting together responses to questionnaires shared with a panel of about 400 service sector firms. 

Elaborating on the survey’s findings, Pollyanna De Lima, economics associate director, S&P Global Market Intelligence, noted, “India's service sector has lost further growth momentum midway through the third fiscal quarter, but we continue to see robust demand for services fuelling new business intakes and output. The current rates of expansion look very healthy when considering their respective long-run averages and the outlook for business activity remains bright in spite of optimism fading due to rising inflation expectations.”

Regarding the prices, the survey found that the rates of both input cost and output charge inflation dipped significantly to eight-month lows. Lima stated that fewer companies increased their fees and this could help enhance demand as 2023 ends. 

The survey further found that service companies stopped hiring to some extent as outstanding business among service firms remained majorly at stable levels. “Given the lack of pressure on operating capacities signalled by stable backlog levels, services firms became more cautious when it comes to hiring. Net employment still rose in November, but the rate of job creation was marginal and the slowest in seven months,” Lima said.

On the outlook, the survey stated that businesses maintained a positive outlook for activity for the upcoming 12 months, even as confidence dipped a bit due to expectations of an increase in inflation. 

At the same time, the S&P Global India Composite PMI Output Index slipped from 58.4 in October to 57.4 in November, indicating the weakest increase in private sector activity across the country for a year.

The Composite PMI indices represent weighted averages of comparable manufacturing and services PMI indices. The weights are indicative of the relative size of the sectors based on the official GDP data. 

The manufacturing sector outperformed the service providers and logged a swifter growth rate, while the service sector witnessed the slowest upturn in one year, the survey found. Factory orders also surged to a large extent, while demand for services dampened. At the composite level, sales logged growth at the weakest rate since November 2022, the agency said.