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Growth of India’s service sector slows in December

06 Jan 2021 Evaluate

The growth of India’s service sector slowed in the month of December, although it remained well above the 50-level that separates growth from contraction, with output and new business rising for the third straight month in December. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index fell to 52.3 in December from 53.7 in November. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services - eased to 54.9 in December from 56.3 in November.

The report further noted that 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. Besides, job shedding was resumed in December, with some firms mentioning that liquidity problems, labour shortages and subdued demand caused the latest fall in employment. The decline in payroll numbers was the ninth in ten months, but marginal overall.

On the price front, input costs increased to the greatest extent since February, on the back of higher prices for a number of items, including cleaning products and fuel, but a renewed fall in selling prices as some firms sought to beat competition and secure new work. Although companies maintained an upbeat view that output will increase in 2021, the overall level of positive sentiment fell from November.

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