Activity in India’s dominant service sector continued to grow at a sustained pace last month, supported by a strong recovery in domestic demand, a private survey found, but high price pressures remained a major concern. .
Asia’s third-largest economy grew at the fastest pace among major economies in the last quarter, boosted by coronavirus vaccinations and increased government spending. The economy grew by 8.4% per year during the July-September quarter.
This positive dynamic seems to have been largely maintained during the first two months of this quarter.
The Service Purchasing Managers Index, compiled by IHS Markit, rose to 58.1 in November from 58.4 in October, but last month’s growth rate was the second best in more than a decade and well above the 50 mark separating growth from contraction for a fourth consecutive month.
Excluding October, new business grew at its fastest pace in almost nine years in November, mainly on the back of a robust recovery in domestic demand.
“The recovery of India’s service sector was prolonged until November. Businesses were somewhat convinced that production levels would continue to rise over the coming year, but concerns about inflationary pressures have once again grown. weighed on confidence, “noted Pollyanna De Lima, associate economic director at IHS. Note it.
Although they reported the biggest increase in input costs since April, companies were only able to pass on a portion of the costs to customers, indicating additional pressure on margins. Prices charged rose at a slower pace in November than in October.
The pace of hiring was also the weakest in three months despite improving business expectations.
Adding to concerns, the recent emergence of the Omicron coronavirus variant has increased the chances of another blow to the economy.
However, a robust expansion in service activity along with strong growth in the manufacturing industry propelled the composite index to an almost 10-year high of 59.2 in November from 58.7 in October.
“Looking at the manufacturing and service sectors combined, the results are even more encouraging and bode well for the economic performance of the third quarter of fiscal year 2021/22 so far,” added De Lima.