Growth in India’s dominant services industry lost some momentum in November as demand weakened, a private survey showed on Thursday, clouding hopes of a quick economic recovery from the COVID-19 pandemic’s blow.
Asia’s third-largest economy, which fell into recession last quarter for the first time since at least 2012, is expected to recover only modestly early next year and won’t reach pre-COVID-19 levels any time soon.
The Nikkei/IHS Markit Services Purchasing Managers’ Index dipped to 53.7 in November from October’s 54.1 but still held well above the 50-mark separating growth from contraction for a second month.
India’s manufacturing recovery also faltered last month as coronavirus fears weighed on demand and output.
“Output and sales across the private sector have held up well, but there were some signs of growth losing momentum among goods producers and service providers,” Pollyanna De Lima, economics associate director at IHS Markit, said in a release.
“Growth constraints, travel restrictions and low footfall as consumers opt to stay home and avoid catching the disease remained key themes of the services PMI.”
A composite PMI, which includes both manufacturing and services, fell to 56.3 last month from October’s 58.0, and while a sub-index tracking overall demand for services was above 50 for a second month the pace of expansion softened from October.
Demand from abroad remained firmly in contraction territory as many countries reimposed lockdown measures to contain a fresh spike in COVID-19 cases.
Still, services firms were far more optimistic about the year ahead - largely on hopes a vaccine for COVID-19 would be rolled out and market conditions would normalise - and businesses ended an eight-month streak of job shedding.
However, both input costs and prices charged rose in November, suggesting the economy is struggling to climb out of a period of low growth and high inflation.
“Low interest rates aimed at mitigating the negative impacts of COVID-19 on the economy and the latest rise in services employment are supportive factors for domestic demand. However, a pick-up in inflationary pressures could threaten the recovery,” De Lima added.
