Services sector witnesses slowdown in activity even as hiring rises : 05-01-2019

India’s servicesNSE 0.10 % sector slowed down marginally in December even though companies hired additional workers to a greater extent, a private survey revealed on Friday.

The Nikkei India Services Business Activity Index fell to 53.2 in December from 53.7 in November, showing a decrease in growth that was among the strongest recorded in the past two years.

A reading above 50 on this survey-based index indicates expansion, while a figure below that denotes contraction.

“India’s service sector continued to enjoy positive levels of activity in December, with new business and employment remaining on an upward path,” said Pollyanna De Lima, principal economist at IHS Markit and author of the report. “However, except for jobs, rates of expansion slowed slightly to form a somewhat disappointing end to 2018.

A sister survey on Wednesday showed manufacturing PMI slowing to 53.2 in December, taking the composite PMI down to 53.6 in December. The composite PMI combines the separate manufacturing and services indices.

A sister survey on Wednesday showed manufacturing PMI slowing to 53.2 in December, taking the composite PMI down to 53.6 in December. The composite PMI combines the separate manufacturing and services indices.

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Information and communication posted the quickest increases in both new business and activity. Real estate & business services was the only sub-sector to record contractions. The consumer services category experienced a return to growth.

COOLING INFLATION
De Lima said the subdued inflationary pressures and cooling economic growth add some support for a rate cut early next year.

“With business sentiment improving for the second successive month, the services sector looks set to sustain growth in 2019 despite predictions of some sluggishness prior to the elections,” she said

Data suggested that the upturn in total new business was domestically driven as new export work was broadly unchanged following a reduction in the prior month.

Source : PTI