India's service sector growth accelerated during November after losing some momentum in October, driven by a faster upturn in new business intakes and subdued price pressures, a monthly survey said on Wednesday.
The seasonally adjusted HSBC India Services PMI Business Activity Index rose to 59.8 in November, from 58.9 in October, supported by new business growth. In the Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
"India's services PMI Business Activity Index rose from 58.9 in October to 59.8 in November, driven by robust new business intakes that fuelled output growth," said Pranjul Bhandari, Chief India Economist at HSBC.
International sales continued to improve as firms reported gains from Asia, Europe and the Middle East. However, the rate of expansion retreated to an eight-month low, the report said, adding that fierce international competition and the supply of cheaper services elsewhere constrained growth.
"... International sales expanded at an eight-month low due to fierce overseas services competition. Input price inflation reached its lowest rate in nearly five-and-a-half years, resulting in negligible increases in selling charges," Bhandari said.
On the employment front, although more jobs were added to India's service economy in November, the rate of expansion was moderate and broadly similar to the one seen in the previous two months, the survey said.
"Employment growth remained modest, with most companies reporting no change in payroll numbers. Meanwhile, India's composite PMI remained strong, though it softened slightly to 59.7 in November, reflecting a slowdown in growth of factory production," Bhandari added.
The HSBC India Composite PMI Output Index fell from 60.4 in October to 59.7 in November, indicating the slowest rate of growth since May, amid a moderation in growth and softer inflationary pressures halfway through the third fiscal quarter.
Composite PMI indices are weighted averages of comparable manufacturing and services PMI indices. Weights reflect the relative size of the manufacturing and service sectors, according to official GDP data.
The year-ahead optimism waned during November amid concerns about competition and potential disruptions from state Assembly elections. Firms still foresee output growth, however, with positive sentiment linked to favourable demand, a greater social media presence, marketing initiatives and plans to keep price increase to a minimum, Bhandari said.
The HSBC India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies.
Also read: India’s manufacturing growth rises to five-year high: PMI
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