India Services PMI Slips To Three-Month Low In December

India's services sector purchasing managers index dipped to three-month low, but remained in expansion zone and strong by historical standards.

The index, compiled by IHS Markit, was at 55.5 in December compared with 58.1 in November. December was the fifth successive month of expansion for the sector.

"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," said IHS Markit in the accompanying release. The latest increase in new orders was centred on the domestic market as new business from abroad fell further due to Covid-related restrictions.

Services sector firms shed jobs in December but the rate of contraction was small, said IHS Markit. The vast majority of surveyed companies (96%) left payroll numbers unchanged from November. "Firms generally suggested that employment levels were sufficient to cope with current workloads."

Companies surveyed reported a further increase in expenses during December. Higher prices were seen across categories like chemicals, food, fuel, medical equipment, office products, tools and transportation. "Although sharp and above its long-run average, the overall rate of inflation softened to a three-month low," the release said. Output prices across the services sector increased but the rate of change of inflation was moderate, below trend and the weakest since September, it added.

Overall, confidence levels remained high and was at a four-month high.