Services PMI Falls To Six-Month Low In January

A gauge of India's services sector fell to its lowest in six months amid concerns over a rapid spread of the Omicron and inflation.

The India Services Business Activity Index, compiled by IHS Markit, stood at 51.5 in January 2022 compared with 55.5 in December 2021, according to a media statement. A reading above 50 indicates expansion in business activity.

The Composite PMI Output Index, too, fell to 53 in January from 56.4 in December.

New work intakes increased further at the start of the year, taking the current sequence of expansion to six months. But the rate of growth was the slowest in six months.

Demand, according to survey participants, was restricted by the fast spread of the Omicron variant and the reinstatement of curfews in parts of the country. Companies became increasingly worried that growth would be harmed by the intensification of the pandemic, the reintroduction of restrictions and inflationary pressures. Business sentiment remained positive, but slipped to a six-month low.

The overall rate of inflation climbed to its highest since December 2011. Survey members noted higher food, fuel, material, staff and transportation costs. The overall rate of output price inflation was moderate and in line with its long-run average.

Jobs declined for the second straight month because of reduced output requirements among some businesses and future uncertainty.

New export business fell at a moderate pace that was the slowest in the current sequence of contraction which started in March 2020.