India’s strong services growth eases slightly in January According to Reuters

By Anant Chandak

BENGALURU (Reuters) – Strong growth in India’s services sector eased last month after hitting a six-month high in December, with orders softening slightly boosting caution over the outlook. companies’ business for the year, a private business survey showed on Friday.

The South Asian nation’s economy is expected to grow 6.0% to 6.8% in the next financial year, the government said this week, slower than the 7.0% growth projected. expected for the current year amid a slowdown in global demand.

But Finance Minister Nirmala Sitharaman said in her budget speech on Wednesday that despite the challenges, the Indian economy is “moving towards a bright future”.

S&P Global (NYSE:NYSE) India’s services purchasing managers index (PMI) fell to 57.2 in January from 58.5 in December, below expectations in a Reuters poll. was 58.1 but above the 50 point separating growth from decline for the 18th straight month.

“As seen at the start of the week from the manufacturing PMI results, growth in the services sector has lost some momentum at the start of the year,” noted Pollyanna De Lima, deputy chief economist at S&P Global Market Intelligence.

“However, the survey shows us that service providers have received large amounts of new business, helping to sustain the historic overall growth rate. Demand resilience in turn has turned. it means output also continues to expand at a generally strong rate.”

She also noted that after picking up again in December, input cost inflation in the services sector fell to a two-year low in January, helping prices rise more slowly and only moderately. .

Charged prices rose at the slowest rate since March 2022. Companies say demand resilience allows them to pass the burden of additional costs on to customers, although some have refrained from rising. costs to increase sales.

This is also reflected in the country’s annual retail inflation rate, which fell to 5.72% in December from 5.88% the previous month.

However, the new export business sub-index fell for the first time since October after hitting its highest level in more than three years last month.

The business outlook also took a hit as overall confidence dropped to a six-month low in January, with 80% of businesses forecasting no change in output levels next year.

De Lima added: “The latest results suggest some caution among service providers, evidenced in part by the fact that the vast majority of companies expect output to be flat from current level”.

“This somewhat weak level of confidence in the outlook appears to have hampered job creation in January.”

Despite staying in expansion territory for the eighth straight month, the employment index was just above breakeven and at levels last seen in July.

Lower numbers for the manufacturing and services sectors meant the composite index fell to 57.5 from last month’s nearly 11-year high of 59.4.

That could affect the decision-making of the Reserve Bank of India. The central bank is expected to make the last rate hike in the current cycle of 25 basis points at its meeting next week.