India services PMI hits 10-month high in December
January 6, 2016, 6:15 am

Growth in India’s services firms rose at its fastest pace in 10 months in December [Image: Archives]

The Nikkei/Markit Services Purchasing Managers’ Index surged to 53.6 in December from November’s 50.1, its fastest pace in 10 months.

The 50-level separates growth from contraction.

“Leading services activity to increase was a solid rise in incoming new work, one that was faster than that seen in November,” said a Nikkei/Markit statement.

The new business sub-index, which measures demand, rose to 53.8 in December from 51.0 the prior month.

Markit warned the state of economic recovery was still fragile and that “meaningful job creation last recorded was in 2013”.

“A stronger rise in new business and an improvement in year-ahead expectations at service providers are positive developments, but the overall health of the economy remains fragile amid a weak manufacturing sector,” said Pollyanna De Lima, economist at Markit.

Goods producers saw both order books and production dip for the first time in over two years, the survey said.

“Whereas manufacturers linked the slump to the Chennai floods, growth of new orders and output had been on a downward trend in recent months,” Lima said.

“Overall, the PMI data continue to portray a struggling economy, weighed down by weak underlying demand. Indeed, cost inflation continues to surpass charge inflation, highlighting the intense competitive environment. Moreover, firms’ reluctance to hire was evident throughout 2015, with meaningful job creation last recorded in 2013. This suggests that conditions are likely to remain challenging in the near-term,” Lima added.

On threats of a sharp slowdown in Asia’s third-largest economy, the government may run a higher budget deficit to stimulate demand.

The employment sub-index has more or less hovered around the 50-mark throughout 2015.

Source: Agencies