Strong domestic demand pushes services PMI to four-month high in November

Lifted by a significant rise in domestic demand, service activity in India expanded in November at the quickest pace in four months, a private survey showed on Wednesday.

The Nikkei India Services Business Activity Index rose from 52.2 in October to 53.7 in November, signalling a solid upturn in output that was the strongest since July.

A reading of over 50 on this survey-based index indicates expansion, below that contraction.


A sister index on Monday had shown manufacturing activity gain momentum and PMI rising to 54 in November from October’s 53.1.

Put together, the seasonally adjusted Nikkei India Composite PMI Output Index rose from 53.0 in October to 54.5 in November, pointing to the fastest expansion in private sector activity since October 2016.

“November saw India’s economy spring back to life, as manufacturers and service providers registered stronger increases in business activity amid an upsurge in demand,” the survey report said.

Services jobs rose in November, stretching the current sequence of expansion to 15 months. So far, 2018 proved to be the strongest year for employment growth for a decade, it said.

“Growth in India’s dominant service sector leapt to a four-month high in November, thanks to solid increases in new work at home, which in turn led to a continued rise in job numbers,” said Pollyanna De Lima, principal economist at IHS Markit and author of the report.

De Lima added that the twin data sets so far suggest that the private sector economy will provide impetus to the third quarter growth.

India’s gross domestic product expanded 7.1% in the second quarter of FY19, down from 8.2% in the April-June period.