Business sentiment hits decade low, stagnates growth of service sector

Business sentiment hits decade low, stagnates growth of service sector
Highlights

Services sector output stagnated in November after four consecutive months of expansion, as business sentiments hit the decade-low level and order flow turned sluggish, a new survey showed on Thursday, painting a “gloomy” picture about economic activities in the country.

New Delhi: Services sector output stagnated in November after four consecutive months of expansion, as business sentiments hit the decade-low level and order flow turned sluggish, a new survey showed on Thursday, painting a “gloomy” picture about economic activities in the country.

The Purchasing Managers’ Index for services sector fell to 50.1 in November, from an eight-month high of 53.2 in October, showing broadly unchanged levels of services sector activity across the country, as per the business survey conducted by Markit and Nikkei.

A reading of 50 divides growth and contraction. The gloomy trend was also observed in the labour market, as employment rose at a pace that was historically muted.

“Service sector output in India broadly stagnated and confidence waned in November, following four consecutive months of increases,” the PMI survey said. “Services companies in India displayed a lack of optimism with regards to the 12-month outlook for activity, as sentiment dropped to the lowest in the ten-year survey history,” it said.

Commenting on the survey results, Markit economist Pollyanna De Lima said, “Following an improvement in the prior month, India’s economic growth moved closer to stagnation in November. Gloomy PMI data show a broadbased weakness in output, with little prospect of a rebound apparent in the near term.”

The latest data comes within days of the manufacturing sector PMI survey on Tuesday showing that the country’s factory output grew at the slowest pace in 25 months.

The composite PMI for services and manufacturing sectors also dipped to 50.2 in November, from 52.6 in October, indicating “little-change in the level of private sector activity in India”.
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