The services industry accelerated to a five-month high in December 2019, raising hopes of an economic recovery, a private survey showed.

The IHS Markit Services Purchasing Managers’ Index (PMI) rose to 53.3 in December from 52.7 in November. A reading above 50-mark shows growth, while one below it reflects contraction.  This is the second straight month of expansion for Services PMI.

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."

Sustained growth

"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 manufacturing sector weakness also fading in December, what was anticipated to be a disappointing private sector performance for the third quarter of 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”.

It may be recalled that the recent manufacturing PMI, which was released last week, showed that India's factory activity accelerated at the fastest pace in seven months in December.

Also read:Solid rise in factory orders boosts manufacturing PMI in December

Taken together, the Composite PMI, which covers both manufacturing and services, has come in at 53.7 in December from 52.7 in November. The reading in December is the highest in five months.

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