India Services Growth At 3-Month High

India's service sector activity expanded at the fastest pace in three months in November, as output and new orders rose at faster rates amid strong demand conditions, survey results from S&P Global showed on Monday.

The services Purchasing Managers' Index climbed to 56.4 in October from 55.1 in September. A score above 50 indicates expansion in the sector.

The upward trend in November was attributed to demand strength, successful marketing and a sustained upturn in sales.

New orders grew for the sixteenth successive month in November, and at the fastest pace since August. Sales were boosted by favorable underlying demand and fruitful advertising.

Meanwhile, new business from abroad increased for the first time since the onset of COVID-19 in early-2020.

On the price front, the rate of cost inflation was marked in November due to higher prices for energy, food, packaging, paper, plastic, and electrical products, along with greater transportation costs. As a result, selling prices grew at the strongest rate since July 2017.

The survey also showed that the pace of employment growth was among the fastest in over three years. Service providers were at their most upbeat towards the year-ahead outlook for output in just under eight years.

"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," Pollyanna De Lima, economics associate director at S&P Global, said.

"Evidence of stubborn inflation may prompt further hikes to the policy rate at a time when global economic challenges could negatively impact on India's growth."

Economic News