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Private sector activity rebounds in November, services output expands after 3 months

"The main positive to be taken from November's survey was a renewed increase in new work, which provided the platform for growth of services activity and employment whilst resulting in an improvement in business confidence," said Pollyanna De Lima, principal economist at IHS Markit, in a press release.

, ET Bureau|
Last Updated: Dec 04, 2019, 11.15 AM IST|Original: Dec 04, 2019, 10.53 AM IST
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The Reserve Bank of India has cut its key interest rate five times this year and was expected to lower borrowing costs by 25 basis points to 4.90% on Thursday, according to a Reuters poll.
NEW DELHI: Indian service providers signalled a moderate rebound in business activity during November, with the return to output growth accompanied by a renewed rise in new business intakes, faster job creation and strengthening business confidence, a private survey showed on Wednesday.

Posting 52.7 in November from 49.2 in October, the IHS Markit India Services Business Activity Index signalled output growth for the first time in three months.

A reading below 50 on the index shows contraction while above that threshold indicates expansion.

“The upturn was associated with a pick-up in demand, improved technology and rising client numbers,” IHS Markit said in the survey report.

As per the report, the modest expansion of services activity was achieved by growth in Consumer Services, Information & Communication and Real Estate & Business Services. Activity fell at Transport & Storage and Finance & Insurance firms.

Employment rose in India’s service economy in November except finance & insurance.

“Although the services economy shrugged off some of the weakness seen in September and October, the latest PMI results continue to sound a note of caution regarding demand and the underlying state of the sector,” said Pollyanna de Lima, Principal Economist at IHS Markit.

Citing “signs of fragility”, de Lima said that rates of expansion in sales and activity were mild by historical standards, while the degree of business confidence remained subdued.

“Also, a moderation in charge inflation, which came despite the strongest upturn in cost burdens for over a year, highlights a lack of pricing power among services firms”

Looking ahead, November data signalled improving confidence about the prospects for the Indian service economy.

A sister survey on Monday had shown a pickup in manufacturing last month. The combined rise in factory and services activity aided Indian private sector output’s rebound in November.

The Composite PMI Output Index rose from 49.6 to 52.7, signalling a moderate pace of increase that was below the long-run survey average

While job creation was sustained in the services economy, goods producers signalled reduced headcounts for the first time in 20 months. At the composite level, there was a slight rise in payroll numbers.
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