Indian service sector continued to strengthen, with a substantial upturn in new orders underpinning output growth. The Services Purchasing Managers' Index, compiled by IHS Markit, eased to 58.1 in November from 58.4 in October, but last month's rate of growth was the second-best in over a decade and well above the 50-mark separating growth from contraction for a fourth straight month. Input costs rose at the second-strongest pace in close to ten years, while the rate of charge inflation softened from October's recent high.
Amid reports of higher fuel, labour, material, retail and transportation costs, average input prices among Indian services companies rose further in November. The overall rate of inflation quickened from October and was the second-strongest in almost a decade, behind April. The report also said few firms transferred higher input costs through to their clients by lifting selling prices, the vast majority kept their fees unchanged from October. As a result, output charges rose at a moderate rate that was slower than in the prior month.
Private sector activity in India continued to expand, taking the current sequence of growth to four months. Moreover, the Composite PMI Output Index signalled the strongest upturn since January 2012, rising from 58.7 in October to 59.2. Robust increases in activity were seen in the manufacturing and service sectors, with growth led by the former. Aggregate new business rose for the fourth month in succession and at the fastest pace in almost ten years.
The pick-up in growth stemmed from the manufacturing industry, as sales among service providers increased at a pace that was little changed from October. The combined rate of input cost inflation matched that seen in October, and was therefore the joint-highest in close to nine and-a-half years. Manufacturing firms recorded a stronger increase than their services counterparts. Concerns over inflationary pressures dampened optimism among Indian private sector companies.
