Services PMI Hits 10-mth High in Dec

India's services firms clocked the fastest pace of output growth in 10 months in December owing to strengthening demand that led to a flurry of new orders, a private survey showed.
The seasonally adjusted Nikkei Services Business Activity Index climbed to 53.6 from 50.1 in the previous month, providing some relief to policymakers. The first set of upbeat data to be released in 2016 came just two days after the same organisation on Monday showed that manufacturing activity in the country had hit a two-year low.Core sector growth contracted 1.3% in November. A reading above 50 on this survey-based index shows expansion, while a figure below that indicates contraction.
Output increased in four of the six broad areas of the service economy, the exceptions being hotels and restaurants, and transport and storage. The best performing categories in December were `other services' and financial intermediation.
In line with mounting cost burden and improved demand environment, services companies in India increased their selling prices in December for the first time since August.
Overall the composite PMI output index indicates a rebound in growth of private sector activity, with a reading of 51.6 in December after a five-month low of 50.2 in the previous month.
December saw the rate of cost inflation reach a seven-month high and input prices across the private sector as a whole increased at the fastest rate since May, but the pace was modest in the context of historical data.
The survey found that services firms did not go in for more recruitment during December after having hired workers in the previous month, but goods producers did take on some additional staff. At the composite level, though, staffing levels were largely unchanged.
Although sentiment among service providers improved during the month, he degree of confidence was the second-weakest in the series history. Worries regarding the consequences of natural disasters weighed on business sentiment, the survey said.
De Lima said that on the whole the PMI data continued to portray a struggling economy, weighed down by weak underlying demand. Indeed, cost inflation continues to surpass charge inflation, highlighting the intense competitive environment and that conditions are likely to remain challenging in the near-term.

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