Services sector PMI hits 5-month high in Nov: HSBC

After manufacturing, the services sector showed robust expansion in November, an HSBC survey said on Wednesday. In manufacturing, private sector output expanded at a faster pace during the month, it added.

The HSBC India Services Purchasing Manager Index (PMI) rose to 52.6 in November from 50 in October.

The index is calculated on the basis of responses received from 350 purchasing managers of private companies in sectors such as hotels & restaurants, transport & storage, financial intermediation, renting & business activities, post & telecommunication and other services.

A number above 50 reflects expansion, while below 50 means contraction.

Pranjul Bhandari, Chief India Economist at HSBC, said service sector activity grew in November as new business rose for the seventh month running.

“Despite the uptick in order flows, business sentiment deteriorated, reminding us that continued policy action that addresses investor concerns is needed to sustain the growth momentum,” he said.

The survey showed that the improvement in PMI was led by robust new business flows from almost all sub-sectors with the exception of financial services.

In addition, price pressures fell to their lowest level in over five years, which should boost business and consumer confidence going forward. To keep the optimism going, it is necessary to continue with policy reforms, it added.

However, growth of activity and new business had little impact on service sector employment in November, as the workforce numbers declined for the first time in four months.

That said, the rate of job-shedding was slight and was offset by marginal job creation in manufacturing.

Consequently, staffing levels across the private sector were unchanged, the survey found.

Service sector input costs fell for the first time since March 2009.

The rate at which input prices decreased was the second-quickest in the survey’s nine-year history, albeit moderate.

Despite manufacturers reporting stronger inflationary pressures, the rate of cost inflation in the private sector eased to the weakest in the current 68-month sequence of rising prices.

Along with the surge in manufacturing, the HSBC India composite PMI climbed to 53.6 in November from 51 in October, a five-month high. This increase was the seventh in consecutive months.

Activity growth at goods producers was the strongest since February 2013, as the service sector was outperformed by manufacturing for the fifth month running.