Services sector growth rises in November but at a slow pace

India’s services sector activity slowed last month on slowing growth in new orders and output, a private survey showed.

The S&P Global Purchasing Managers’ Index (PMI) declined to a one-year low of 56.9 in November from 58.4 in the previous month.

A reading above 50 indicates expansion in services sector activity, while that below 50 shows a contraction.

“Granular data showed widespread slowdowns in rates of growth for both new orders and output across the four broad areas of the service economy. Finance and insurance topped the rankings, while real estate and business services came last,” S&P Global said in a statement.

International demand for Indian services improved further but, as for total new orders, growth lost momentum. The latest increase in new export orders was moderate and the slowest since June, it said.

Businesses maintained a positive outlook for activity in the coming 12 months, although confidence somewhat faded due to rising inflation expectations, the survey added. The indicator tracking international demand fell to a five-month low.

“India’s service sector has lost further growth momentum midway through the third fiscal quarter, but we continue to see robust demand for services fueling new business intakes and output. The current expansion rates look very healthy when considering their respective long-run averages and the outlook for business activity remains bright despite optimism fading due to rising inflation expectations,” Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said in the statement.

The services sector expanded at its fastest pace in 13 years in July as demand rose despite elevated inflationary pressures.

The Indian economy, supported by government spending and manufacturing, grew by 7.6% in the July-September quarter, government data showed.

Manufacturing grew at the fastest pace of 13.9% against 4.7% in the previous quarter and a decline of 3.8% in the year-ago quarter. Construction grew at 13.3% against 7.9% in the past quarter and 5.7% a year ago.

India jumped three slots to the seventh position in a ranking of services trade in 2022 following a 32% surge in exports, primarily of computer services, data from a recent World Trade Statistical Review (WTSR) report showed.

Computer services was the most dynamic sector in services trade, with global exports worth 44% more than their value in 2019, World Trade Organization (WTO) director-general Ngozi Okonjo-Iweala said in the WTSR report.