HSBC India Composite PMI Output Index climbs to a five-month high of 53.6 in November 2014
The latest increase was the seventh in consecutive months and solid overall. Activity growth at goods producers was the strongest since February 2013, as the service sector was outperformed by manufacturing for the fifth month running.
Rising from 50.0 to 52.6, the seasonally adjusted HSBC India Services PMI Business Activity Index – a single question tracking changes in activity at Indian services companies on a month-by-month basis – was consistent with a solid expansion in service sector activity in November. Moreover, the latest reading was the highest in five months, albeit below the series average. Post & Telecommunications was the best performing of the broad areas monitored, while contractions in activity were registered in Financial Intermediation and Hotels & Restaurants.
Business activity was driven higher by faster growth of new business in November, as the respective index for services firms posted above the crucial 50.0 threshold for the seventh month in a row. Furthermore, the pace of expansion was solid overall and the quickest since July. New order growth also accelerated at manufacturers, leading to a solid expansion across the private sector as a whole.
Growth of activity and new business had little impact on service sector employment in November, as workforce numbers in the Indian service sector declined for the first time in four months. That said, the rate of job shedding was slight overall and offset by marginal job creation in the manufacturing industry. Consequently, staffing levels across the private sector were unchanged.
Indian service providers registered backlog accumulation for the second consecutive month in November. However, the rate of increase eased from the previous month and was moderate overall. Growth was recorded across the private economy for the ninth successive month.
Meanwhile, 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 overall. Despite manufacturers reporting stronger inflationary pressures, the rate of cost inflation in the private sector overall eased to the weakest in the current 68-month sequence of rising prices.
Subsequently, prices charged by Indian services firms deteriorated for the first time in more than four years in November. That said, the pace at which selling prices fell was fractional overall. A faster rise at goods producers did not prevent the rate of private sector charge inflation easing to the joint-slowest in more than four years.
Finally, companies operating in the Indian service sector remained optimistic regarding prospects for activity growth in November. However, despite improvements in activity and new business, sentiment slipped to the weakest since mid-2007.
Commenting on the India Services PMI survey, 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 growth momentum. Meanwhile, prices dipped on falling commodity prices and increased competition."
