Mumbai, Feb 3 (Agency) Hit by the second wave of the Covid-19 pandemic and a decline in business confidence, India’s service sector grew the slowest in six months in January, a recent survey said. According to the survey by IHS Market India Services, India’s services PMI declined to 51.5 in January this year from 55.5 in December, which is the slowest expansion in six months. “The escalation of the pandemic and reintroduction of curfews had a detrimental impact on growth across the service sector.
Both new business and output rose at slight rates that were the weakest in six months,” IHS Markit Economics Associate Director Pollyanna De Lima said. According to the survey, demand was restricted by the fast spread of the Omicron variant and the reinstatement of curfews in parts of the country. The report highlighted that the business activity growth across the Indian private sector was sustained at the start of the year, but lost considerable momentum.
“The Composite PMI Output Index fell from 56.4 in December to 53.0 in January, signalling the slowest rate of expansion in the current six-month period of growth. Both services activity and manufacturing production increased at weaker rates,” it said. The report highlighted that companies became increasingly worried that growth would be harmed by the intensification of the pandemic, the reintroduction of restrictions and inflationary pressures. January data pointed to a stronger increase in expenses among service providers, with the overall rate of inflation climbing to its highest since December 2011.
Also, input prices rose significantly, according to the report. “Prices charged for the provision of services in India continued to increase at the start of the year, with many companies suggesting that additional cost burdens were transferred to consumers. Despite quickening from December, the overall rate of output price inflation was moderate and in line with its long-run average,” the report said.
Lima said the latest PMI results brought worrying news as input prices increased at the sharpest rate in over a decade. “Charges rose at a faster pace as some firms continued to transfer additional cost burdens to consumers, but the rate of inflation here was moderate as the vast majority of monitored companies left their fees unchanged since December,” Lima added. Service sector jobs declined for the second month running during January, owing to reduced output requirements among some businesses and future uncertainty. That said, employment decreased at a slight pace that was broadly similar to December. “Concerns about how long the current wave of COVID-19 will last dampened business confidence and caused job shedding,” Lima added.