India’s services activity grew at its fastest pace in three months in November on strong demand, lifting optimism to its highest level in eight years, according to a business survey, with prices rising at the fastest rate since July 2017. .
The S&P Global India Services Purchasing Managers’ Index rose to 56.4 in November from 55.1 in October, beating a Reuters poll estimate of 55.4.
It remained above the 50-mark separating growth from contraction for the 16th straight month, its longest extension since October 2016.
“Indian service providers continue to take advantage of strong domestic demand, with 2022 PMI data showing rapid growth in new business and output,” said Pollyanna De Lima, Economics Associate Director at S&P Global.
“Moreover, expectations of a pick-up in demand in the medium term fueled further job creation.”
Official data released last week showed private consumption rose 9.7% year-on-year in the last quarter on a boost in demand for services, helping Asia’s third-largest economy grow 6.3% during the period.
However, growth is widely expected to slow in the coming quarters as high interest rates constrain economic activity.
The PMI showed foreign demand expanded for the first time since the pandemic began, an encouraging sign given the slowing global growth has already begun to hurt exports, which fell 17% in October from a year earlier. went.
Strong demand pushed business confidence to the highest level since January 2015.
However, increased input prices forced firms to raise prices at the fastest rate in nearly five and a half years.
This could put further pressure on overall inflation, which fell to a three-month low of 6.77% in October but remained above the RBI’s tolerance limit.
“Evidence of stable inflation may warrant a further increase in the policy rate at a time when global economic challenges could negatively impact India’s growth,” de Lima said.
The RBI, which has raised its key interest rates by 190 basis points since May, will on Wednesday raise the repo rate by 35 basis points to 6.25% and to a peak of 6.50% by the end of March, according to a Reuters poll.
Better-than-expected manufacturing growth as well as a stronger expansion in services activity lifted the overall index to a three-month high of 56.7 in November from 55.5 in October.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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