NEW DELHI: Business activity growth in India’s service sector cooled further at the start of 2019, amid the weakest upturn in new work since last September, a private survey showed on Tuesday.
The Nikkei/IHS Markit Services Purchasing Managers’ Index declined to a three-month low of 52.2 in January from 53.2 in December, but remained above the 50 mark separating growth from contraction for an eighth month.
“There is some sign that growth may run out of steam, in the short-term at least, as seen by the weakest improvement in demand for four months and relatively subdued optimism,” said Pollyanna De Lima, principal economist at IHS Markit and author of the report.
A key factor restricting the rise in services activity was a softer expansion in new work. Firms noted a moderate increase in sales that was the weakest in four months.
However, services employment continued to expand, with job creation at a three-month high. According to panel members, growth was underpinned by ongoing increases in new business and favourable market conditions.
“The good news came from the Indian labour market. Job creation at service providers was among the strongest seen for the past seven-and-a-half years at the start of 2019,” added De Lima.
“The increasing willingness of companies to hire workers should help reduce still high levels of unemployment in the country.”
A sister survey last week had shown an upturn in manufacturing. A composite index, taking into account both manufacturing and services activity, remained unchanged at December’s 53.6, helped by an unexpected acceleration in factory activity.
“Should data for services carry on a downward path, we could see a slowdown in GDP expansion in the final quarter of fiscal year 2018,” De Lima cautioned.