Services PMI touches 10-month high in Dec

Highlights

Growth in India\'s services firms rose at its fastest pace in 10 months in December as demand picked up, a business survey showed on Wednesday.

New Delhi : Growth in India's services firms rose at its fastest pace in 10 months in December as demand picked up, a business survey showed on Wednesday. The Nikkei/Markit Services Purchasing Managers' Index (PMI) surged to 53.6 in December from November's 50.1, marking a sixth month above the 50-level that separates growth from contraction.

That should provide some comfort to policymakers after a related survey showed India's factory activity contracted for the first time in more than two years on dwindling demand. Indeed, the latest survey showed the new business sub-index, which measures demand, rose to 53.8 in December from 51.0 the prior month.

On outlook, firms were positive, with the business expectations sub-index back to above 50 after it surprisingly contracted in the prior month. Still, the latest reading for expectations was the second-lowest in the history of the survey.

"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.

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