Cash crunch triggers a struggle for firms for the third month running
NEW DELHI: Services activity contracted for the third successive month in January as firms struggled with less cash in circulation but the pace of contraction slowed, a private survey showed on Friday.
The Nikkei India Services Business Activity Index was 48.7 in January, up from 46.8 in the previous month. A reading above 50 indicates expansion and a figure below that indicates contraction.
“India’s pivotal service sector remained in contraction territory in the opening month of 2017, with both new business and activity falling for the third straight month,” said Pollyanna De Lima, economist at IHS Markit and author of the report.
A survey by the same firm on Wednesday showed slight improvement in the health of India’s manufacturing as manufacturing PMI was up to 50.4 during the month from 49.6 in December 2016, suggesting modest expansion.
Nikkei India Composite PMI Output Index rose to 49.4 in January from 38-month low of 47.6 in the previous month. “What started as a downturn driven by the 500 and 1,000 rupee notes ban appears now to be losing strength. The upturn at goods producers combined with a slowdown in the contraction of services activity resulted in only a fractional drop in private sector output,” De Lima said, adding that there is room for accommodative monetary policy.
Lower consumer spending pulled inflation down to a more than two year low of 3.41% in December 2016, raising expectations that the Reserve Bank may ease policy in its review meeting next week.
The Nikkei India Services Business Activity Index was 48.7 in January, up from 46.8 in the previous month. A reading above 50 indicates expansion and a figure below that indicates contraction.
“India’s pivotal service sector remained in contraction territory in the opening month of 2017, with both new business and activity falling for the third straight month,” said Pollyanna De Lima, economist at IHS Markit and author of the report.
A survey by the same firm on Wednesday showed slight improvement in the health of India’s manufacturing as manufacturing PMI was up to 50.4 during the month from 49.6 in December 2016, suggesting modest expansion.
Nikkei India Composite PMI Output Index rose to 49.4 in January from 38-month low of 47.6 in the previous month. “What started as a downturn driven by the 500 and 1,000 rupee notes ban appears now to be losing strength. The upturn at goods producers combined with a slowdown in the contraction of services activity resulted in only a fractional drop in private sector output,” De Lima said, adding that there is room for accommodative monetary policy.
Lower consumer spending pulled inflation down to a more than two year low of 3.41% in December 2016, raising expectations that the Reserve Bank may ease policy in its review meeting next week.
