November 2020: Services Expand But a Tad Lower Than in October

India’s service sector expanded for the second month in a row in November, although at a slower pace than the previous month, and employment rose for the first time in nine months.

The IHS Markit India Services Business Activity Index was 53.7 in November, above the critical 50 mark that separates growth from contraction, but lower than 54.1 in October.

The overall level of positive sentiment climbed to the highest since February amid predictions that market conditions would normalise once a vaccine for Covid-19 is rolled out.

“The Indian service sector continued to recover from the coronavirus-induced contractions recorded from March through to September... There was also an improvement in business confidence, which bodes well for employment over the coming months,” said Pollyanna De Lima, economics associate director at IHS Markit.

The upturn in total new work was driven by the domestic market, with new export orders decreasing sharply again in November. The latest fall in international sales, the ninth in consecutive months, was attributed to subdued global demand and travel restrictions.

Sub-sector data showed the transport & storage category as the best-performing in November, with output and sales growth rates surpassing those in consumer services and finance & insurance. Information & communication and real estate & business services saw a reduction in new orders and activity, according to the survey.

A sister survey showed the IHS Markit India Manufacturing Purchasing Managers’ Index falling to a three-month low of 56.3 in November from an over 12-year high of 58.9 in October.

Put together, Indian private sector activity rose for the third straight month in November, but the pace of growth softened from October’s near nine-year high. The Composite PMI Output Index was down to 56.3 from 58 in October as rates of increase eased at manufacturers and service providers.

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