Services sector activity in India at a 10 month high

Services sector activity in India at a 10 month high
Highlights

India’s services sector activity touched a 10-month high in December driven by a significant rise in new business orders but the overall health of the economy remains fragile amid a weak manufacturing sector, a survey showed on Wednesday.

India’s services sector activity touched a 10-month high in December driven by a significant rise in new business orders but the overall health of the economy remains fragile amid a weak manufacturing sector, a survey showed on Wednesday.


The Nikkei Business Activity index climbed to a ten-month high of 53.6 in December from 50.1 in November, thanks to a solid rise in incoming new work. The growth of private sector output in December was largely driven by services sector as manufacturing production decreased for the first time since October 2013.

“The Indian private sector returned to expansion territory at the end of 2015, eking out modest output growth in December,” said Pollyanna De Lima economist at Markit. Meanwhile, the seasonally adjusted Nikkei India Composite PMI Output index, which maps both manufacturing and services sectors, rose to 51.6 in December from Novem-ber’s five-month low of 50.2.

In the first contraction in over two years, manufacturing sector output dipped in December to a 28-month low as new orders fell sharply and production took a big hit from heavy rains in Chennai.

The survey noted that even as service providers sentiment improved in December, the degree of confidence was the second-weakest. Business sentiment was restricted by worries regarding the consequences of natural disasters, it added.

“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,” Ms Lima added. She further said goods producers saw both order books and production dip for the first time in over two years. Whereas manufacturers linked the slump to the Chennai floods, growth of new orders and output had been on a downward trend in recent months.
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