Services sector slows in January 2017

Activity in India's services sector contracted for the third successive month in January, but the pace was pointing to expectations that the situation will soon return to normal. The government's move to scrap Rs.500 and Rs.1,000 notes on November 8 had hurt several segments of the economy due to the cash squeeze but since then supply of new notes has eased the situation.

The Nikkei India Services Business activity index rose to 48.7 in January from the previous month's 46.8.The 50-point mark separates expansion from contraction. Some firms indicated that market conditions had improved following the close of the window for exchanging high-value notes, the survey said. The services sector accounts for about 60% of the economy. The RBI will review monetary policy next week.

The survey showed sentiment among services companies improved considerably during January on the back of expectations that market conditions will soon normalise.

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