The Indian private sector economy moved further away from the weakness recorded earlier in the quarter, with business activity rising for the second month running in December and at the quickest pace since July. The Composite PMI Output Index was up from 52.7 in November to 53.7, reflecting stronger rates of expansion in both the manufacturing and service sectors. The Indian services economy gained growth momentum in December, shrugging off the weakness recorded in September and October. A marked and accelerated upturn in new work intakes boosted the growth of output and employment, whilst supporting an uptick in business confidence. Worryingly, inflationary pressures intensified, with the fastest rise in input costs for almost seven years pushing output charge inflation to a 22-month high. Total sales expanded for the third consecutive month at the end of the year, and at the quickest pace since October 2016. Where growth was recorded, panellists commented on improved business decisions at the managerial level, the offering of new services and better underlying demand. Amid reports of new business growth, service providers continued to hire extra staff in December. Employment increased for the twenty-eighth month in succession and at a rate that, although modest, was the quickest since August. Indian services companies expect marketing efforts and favourable economic conditions to boost business activity in 2020. Despite rising to a four-month high, the overall level of positive sentiment remained below its long-run average. Commenting on the latest survey results, Pollyanna de Lima, Principal Economist at IHS Markit, said: "It's encouraging to see the Indian service sector continuing to recover from the subdued performances noted in September and October. More importantly, the news of sustained job creation, robust new order growth and a pick-up in business confidence suggest that expansion can be maintained in the early part of 2020. Worryingly, however, were the survey's results for price indicators. While inflation was subdued in the earlier part of 2019, there were three consecutive accelerations in the rate of input cost inflation this quarter. Services firms saw the fastest rise in their expenses in almost seven years in December. With the manufacturing sector weakness also fading in December, what was anticipated to be a disappointing private sector performance for the third quarter of the the fiscal year 2019-20 is now looking brighter. Growth looks set to be sustained, but at an unspectacular rate, with the latest quarterly PMI Composite Output Index reading broadly in line with that recorded in the three months to September." |
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