New Delhi [India], January 6 (ANI): India's service sector continued to recover from the coronavirus disease 2019 (COVID-19) induced contractions seen through most of 2020 with output and new business rising for the third straight month in December, according to the latest IHS Markit Services Purchasing Managers' Index (PMI) released on Wednesday.
However, in both cases, the rates of growth softened to the weakest over this period. Staff hiring came to a halt due to liquidity concerns, labour shortages and subdued demand while business optimism faded.
Price data showed a pick-up in input cost inflation, the strongest since February, but a renewed fall in selling prices as some firms sought to beat the competition and secure new work.
Posting 52.3 in December, the seasonally adjusted India Services Business Activity Index highlighted output growth for the third month in a row.
Falling from 53.7 in November, the latest figure pointed to the slowest pace of expansion. Companies indicated that growth was supported by the securing of new work, though curbed by competitive pressures and the COVID-19 pandemic.
Services firms suggested that marketing efforts bore fruit, underpinning a further increase in new business during December. Growth eased to the slowest in the current three-month sequence of expansion due to the negative impact of COVID-19 on demand.
Global COVID-19 restrictions, particularly travel bans, reportedly restricted international demand for Indian services at the end of 2020. New export business decreased sharply but at the slowest pace since March.
Although private sector activity continued to increase at the end of year, the upturn eased to a three-month low. The Composite PMI Output Index fell from 56.3 in November to 54.9 in December, with underlying data showing slower rates of expansion at both manufacturers and service providers.
Similarly, aggregate new orders rose for the fourth month running but at the weakest rate since September. Manufacturers and services companies saw weaker expansions.
"It is clear that the early part of 2021 will continue to be challenging," said Pollyanna De Lima, Economics Associate Director at IHS Markit.
"But we are looking at a sustainable recovery and some return to normality once COVID-19 vaccines become available."
The IHS Markit India Services PMI is compiled from responses to questionnaires sent to a panel of around 400 service sector companies. The sectors covered include consumer (excluding retail), transport, information, communication, finance, insurance, real estate and business services.
The panel is stratified by detailed sector and company workforce size based on contributions to GDP.
IHS Markit is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government. (ANI)