India’s key services industry lost momentum in November as demand weakened after the initial rush observed during the festive season, reducing hopes of a quick economic recovery from the pandemic’s devastating blow.
India’s economy, which has technically entered a period of recession, showed improvement in the July-September quarter as GDP contraction softened to 7.5 per cent from 23.9 per cent in the first quarter. However, it is unlikely that the economy would reach pre-Covid levels any time soon.
The Nikkei/IHS Services Purchasing Managers’ Index dipped to 53.7 in November from October’s 54.1. While it is remained above the 50-mark — separating growth from contraction — for the second straight month, the road to recovery is still far away.
Not just the services sector, but activity in the manufacturing sector also dipped in November as higher cases of Covid-19 weighed on demand and output.
IHS Markit said in a release that output and sales across the private sector have held up well but added that there are some signs of growth losing momentum among goods producers and service providers.
“Growth constraints, travel restrictions and low footfall as consumers opt to stay home and avoid catching the disease remained key themes of the services PMI,” it said.
Meanwhile, the composite PMI that includes both manufacturing and services fell to 56.3 in November from October’s solid 58.0.
Even as higher domestic demand during the festive season helped in the recovery, the same cannot be said for foreign demand, which remained firmly in contraction territory.
Despite the uncertainty, services firms in the country are optimistic about next year, largely on hopes of vaccine availability for the masses. However, there has been a rise in both input costs and prices charged for goods in November, signalling that the economy is struggling due to high inflation.