CHENNAI: After four months of expansion, services sector output fell in November to a decade-low, on slow order flow and subdued business sentiment.
The Purchasing Managers’ Index for services sector fell to 50.1 in November. A month ago, it stood at a eight-month high of 53.2, according to the survey conducted by Markit and Nikkei. A reading of 50 divides growth and contraction.
“Service sector output in India broadly stagnated and confidence waned in November, following four consecutive months of increases,” the PMI survey said adding, “Services companies in India displayed a lack of optimism with regards to the 12-month outlook for activity, as sentiment dropped to the lowest in the ten-year survey history.”
The gloomy trend was observed in the labour market, as employment rose at a pace that was historically muted.
The latest data comes within days of the manufacturing sector PMI survey on Tuesday showing the country's factory output growing at the slowest pace in 25 months.
The composite PMI for services and manufacturing sectors dipped to 50.2 in November, from 52.6 in October, indicating “little-change in the level of private sector activity in India”.
According to Markit Economist Pollyanna De Lima, "Following an improvement in the prior month, India's economic growth moved closer to stagnation in November. Gloomy PMI data show a broadbased weakness in output, with little prospect of a rebound apparent in the near term."
However, government data showed India's economy grew by 7.4 per cent in the second quarter, outpacing China to become the fastest growing major economy.
Meanwhile, on the prices front, output prices in services sector, however, stabilised in November. The survey members blamed fierce competition and frail economic conditions for the slowdown in growth of new work. Lima said that weak demand led to the services companies witnessing the slowest rise in incoming new work since July.