Photo has been used for representation only. , Photo credit: The Hindu Businessline
India’s services sector continued to post its fastest output growth in three months in November, up 55.1% from last year, with new orders arriving at the highest pace since August, according to the S&P Global India Services Purchase Managers’ Index (PMI). increased to 56.4. october. A reading of 50 on the PMI indicates no change in business activity levels.
However, the input cost burden on service providers remained buoyant, rising at the second-fastest rate since July 2022, prompting them to increase charges for consumers at the fastest rate in 64 months or less than five-and-a-half years. Forced to
This is the 21st month in a row that service firms have increased charges due to higher costs. In addition to higher transportation costs, firms cited higher prices for energy, food, packaging, paper, plastic and electrical products.
Significantly, since the beginning of foreign trade, there has been a surge in new business from abroad for the first time this November. COVID-19 In early 2020, even though the overall rate of expansion in new orders for services firms was mild.
A continued expansion in new orders and a pick-up in demand, coupled with a sharp improvement in business confidence levels, boosted job creation in the services economy, with new employment at a ‘solid pace that was the fastest in three years’.
“Service providers were at their most upbeat with year-ahead outlook for production within just eight years. S&P Global said in a note on survey-based PMIs, firms expect demand to remain strong in 2023 with plans to increase marketing budgets through 2023.
“Indian service providers continue to take advantage of strong domestic demand, with PMI data showing rapid growth in new business and output. In addition, expectations of a pick-up in demand over the medium term fuel further job creation,” said Pollyanna De Lima, associate director of economics at S&P Global Market Intelligence.
While the inflationary trend is somewhat of a concern, Ms. de Lima said strong demand for services has again increased firms’ pricing power, with more firms passing on cost increases to their customers.
They concluded, “Evidence of recalcitrant inflation may warrant a further increase in the policy rate at a time when global economic challenges could negatively impact India’s growth.”