Services PMI falls to 47.8 in February from 51.7 in January
, ET Bureau|
Updated: Mar 05, 2018, 11.30 AM IST
Service activity in India contracted in February for the first time since November as rising price pressures led to a decline in new businesses orders, a private survey showed on Monday.
The seasonally adjusted Nikkei India Services Business Activity Index fell from 51.7 in January to 47.8 in February, its lowest level since August.
“Both activity and new work declined for the first time since November, with rates of contraction the strongest since August, thereby ending the recent recovery experienced by India’s service sector,” said Aashna Dodhia, an economist at IHS Markit and author of the report.
A sub-index tracking new business sank to a six-month low of 48.0 last month from 51.7 in January as demand continued to be affected by higher prices.
“Anecdotal evidence pointed to weak underlying demand conditions in the service economy,” she said.
The survey showed prices rising at their fastest pace in seven months after a sharper hike in input costs forced services firms to transfer some of the inflationary pressure to customers.
The contraction in services activity offset an expansion in manufacturing and caused a composite PMI, which includes both, to plunge to 49.7, its lowest since August, from 52.5 in January.
“However, firms seem to believe that the decline is transitory as they raised their staffing levels at the joint-fastest pace since June 2011, in line with positive projections of activity growth,” said Dodhia.
Indian economy grew at its sharpest annual rate in more than a year during the October-December quarter at 7.2%, reclaiming its title of the world’s fastest growing major economy.
The seasonally adjusted Nikkei India Services Business Activity Index fell from 51.7 in January to 47.8 in February, its lowest level since August.
“Both activity and new work declined for the first time since November, with rates of contraction the strongest since August, thereby ending the recent recovery experienced by India’s service sector,” said Aashna Dodhia, an economist at IHS Markit and author of the report.
A sub-index tracking new business sank to a six-month low of 48.0 last month from 51.7 in January as demand continued to be affected by higher prices.
“Anecdotal evidence pointed to weak underlying demand conditions in the service economy,” she said.
The survey showed prices rising at their fastest pace in seven months after a sharper hike in input costs forced services firms to transfer some of the inflationary pressure to customers.
The contraction in services activity offset an expansion in manufacturing and caused a composite PMI, which includes both, to plunge to 49.7, its lowest since August, from 52.5 in January.
“However, firms seem to believe that the decline is transitory as they raised their staffing levels at the joint-fastest pace since June 2011, in line with positive projections of activity growth,” said Dodhia.
Indian economy grew at its sharpest annual rate in more than a year during the October-December quarter at 7.2%, reclaiming its title of the world’s fastest growing major economy.
