India’s services sector contracted in November, its Purchasing Managers’ Index edging down to 58.4 from 58.5 recorded in October. The sector, though contracting by a small percentage, still saw a jump in hiring, which reached its highest pace since it began being tracked in 2005.The growth of employment has been attributed to better business confidence, more new orders, and excellent international demand.Â
Pranjul Bhandari, HSBC chief India economist said: This was the best kind of pickup in hiring which should well go with business optimism and yet, inflation – from food and labour side that pushed input as well as output prices to its peak in the last 15 months ago while for output it has now turned almost 12 years. Services PMI gauges India’s service sector. These figures are capturing employment trends as also sales, price trends along with inventory.Â
An earlier flash survey had predicted an increase in the Services PMI Business Activity Index to 59.2 in November, having been driven by record growth in employment. On the whole, however, total sales expanded at a slower rate than was recorded in October, a trend that is still indicated through the seasonally adjusted index being well over four points from its long-term average and therefore robustly growing.Â
However, manufacturing PMI slumped to an 11-month low of 56.5 in November from 57.5 in October as growth in manufacturing softened. The slowdown comes at a time when India’s overall GDP growth softened to a seven-quarter low of 5.4% in the July-September 2024 period from 6.7% in the previous quarter. Analysts said that weaker manufacturing and contraction in mining were the principal factors behind the slowdown. The data comes at the time when India’s Reserve Bank Monetary Policy Committee is reviewing interest rates. The repo rate has been kept constant at 6.5% since February 2023, but markets expect the RBI to change its growth and inflation estimates.Â
