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India's Services Sector Growth Slows In December 2021

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India's Services Purchasing Managers' Index fell from 58.1 in November to a three-month low of 55.5 in December, data compiled by IHS Markit shows. The seasonally adjusted India Services Business Activity Index was still consistent with a marked rate of economic expansion.

 
India's Services Sector Growth Slows In December 2021

December data pointed to a broad-based decline in employment at goods producers and service providers. At the composite level, jobs decreased for the first time in four months.

"Indian services companies continued to report growth of sales and business activity in December. Rates of expansion moderated, but were nevertheless marked by historical standards. However, despite robust gains in new work in recent months, companies were able to stay on top of workloads and as a consequence reduced headcounts at the end of 2021," a release by IHS Markit stated.

Commenting on the latest survey results, Pollyanna De Lima, Economics Associate Director at IHS Markit, said: "2021 was another bumpy year for service providers and growth took a modest step back in December. Still, the latest readings pointed to robust increases in sales and business activity compared to the survey trend. "Moreover, owing to the buoyant performances seen in October and November, the average growth rate for output over the third quarter of fiscal year 2021/22 was the strongest since the three months to March 2011. "Services firms were generally confident that output would increase in 2022, but fears of new COVID-19 waves and price pressures somewhat hindered optimism. "Encouragingly, inflationary pressures in the service economy showed signs of abating at the end of 2021, as both input costs and output charges rose at the slowest rates in three months. "Uncertainty surrounding the outlook, and a general lack of pressure on capacity, led to a renewed fall in employment during December. That said, the decline was marginal and a recovery is expected this year should demand for services remain favourable."

Read more about: services sector pmi data
Story first published: Wednesday, January 5, 2022, 11:36 [IST]
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