India’s business activity slips to three-month low at 55.5 in Dec

India’s business activity slipped to a three-month low at 55.5 in December from a 58.1 in November. “Despite falling from 58.1 in November to a three-month low of 55.5 in December, the seasonally adjusted India Services Business Activity Index was still consistent with a marked rate of economic expansion. The upturn was often associated with improving market conditions and accommodative demand,” reported IHS Markit.

The report stated that there was an improvement in business confidence although sentiment remained subdued as firms remained concerned about price pressures and the possibility of a new wave of Covid-19. However, rates of input cost and output charge inflation eased in December.

Monitored companies reported an increase in business intakes, and the rise was for the fifth successive month but also softened to a three-month low.

New business from abroad took a dip. Hence the increase in new orders centred around the domestic market. The dip in international orders was due to COVID-19 restrictions.     

Indian services companies continued to clear their outstanding business at the end of the year.

“December data showed renewed job shedding in the service economy, but the rate of contraction was only slight. In fact, the vast majority of surveyed companies (96%) left payroll numbers unchanged from November. Firms generally suggested that employment levels were sufficient to cope with current workloads,” the report added.

Prices for provision of services increased at the end of 2021 but the rate of charge inflation was moderate and the weakest since September.

“Private sector firms in India recorded a further robust increase in output during December, despite the pace of expansion easing to a three-month low. The Composite PMI Output Index slipped from 59.2 in November to 56.4, but remained above its long-run average of 53.9. Both manufacturing production and services activity rose at slower, albeit historically strong, rates,” stated the report.
                
There was a broad-based decline in employment at goods producers and service providers in December. Jobs, at the composite level, increased for the first time in four months. Expenses of Indian private sector companies continued to increase sharply in December, although the rate of cost inflation eased to the slowest since September.            

Also read: India’s manufacturing PMI falls to 55.5 in Dec