India's November Services PMI Expands At Its Slowest Pace In One Year

India's services sector expanded at its slowest pace in a year in November as output and new business expansion remained soft, a private survey showed.

Despite falling from 58.4 in October to a one-year low of 56.9 in November, the seasonally adjusted S&P Global India Services Business Activity Index pointed to a rise in output across the sector. The rate of expansion was also considerably stronger than its long-run average, according to a release on Tuesday.

Composite PMI also fell from 58.4 in October to 57.4 in November—the lowest in a year.

The upturn reportedly stemmed from new client wins, demand strength and favourable market conditions. Granular data showed widespread slowdowns in rates of growth for both new orders and output across the four broad areas of the service economy.

Finance and insurance topped the rankings, while real estate and business services came last. International demand for Indian services improved further but, as for total new orders, growth lost momentum. The latest increase in new export orders was moderate and the slowest since June, the survey showed.

Services firms endured an increase in their operating expenses, with labour, food, material and transportation costs reportedly rising since October. However, the overall rate of inflation softened to an eight-month low and was below its long-run average. Charge inflation also receded to the weakest in eight months during November, though here the rate of increase was above the series trend.

Qualitative data from the future output question indicated that rising inflation expectations somewhat curbed optimism in November. However, services firms still forecast activity growth in the year-ahead amid hopes of better demand conditions.

Net employment still rose during November, but the pace of expansion was marginal and the weakest since April.