Lifted by a significant rise in domestic demand, the Indian economy enjoyed its best month in over two years in November, with both services and manufacturing driving growth. This year has also been the strongest for employment growth in a decade.
The seasonally adjusted Nikkei India Composite PMI Output Index rose to 54.5 in November from 53 in October, pointing to fastest expansion in private sector activity since October 2016.
The composite PMI combines manufacturing and services indices.
The Services Business Activity Index rose to 53.7 in November from 52.2 in October, signalling the strongest upturn in output since July. Manufacturing PMI rose to 54 in November from October’s 53.1. A reading above 50 on this survey-based index indicates expansion, while a figure below that denotes contraction.
India’s gross domestic product expanded below expectations at 7.1% in the second quarter of FY19, compared with 8.2% growth in the April-June period, triggering a raft of downgrades in full-year forecasts. However, the Reserve Bank of India kept its growth estimate unchanged at 7.4% for this financial year.
The PMI services activity index is based on a survey of purchasing executives of more than 400 service providers in five categories: consumer services, transport & storage, information & communication, financial & insurance and real estate & business services.
Information & communication led the increases in both business activity and new work, while real estate & business services was the only category that didn’t expand.
According to the survey, the underlying data indicated the upturn reflected robust demand in the domestic market, as the newly launched export business data showed a renewed decline in new work from abroad. Services jobs rose in November, stretching the current sequence of expansion to 15 months.
Business sentiment at service providers strengthened in November, boosted by predictions of gradual improvement in market conditions.
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