"This somewhat subdued level of confidence towards the outlook appeared to have stymied job creation in January." Despite being in expansionary territory for an eighth month in a row, the employment index was only just above breakeven and at a level last seen in July. The lower readings for manufacturing and services sectors meant the composite index fell to 57.5 compared with the previous month's near 11-year high of 59.4. That may weigh on the Reserve Bank of India's decision making. The central bank is expected to make a final interest rate hike in the current cycle of 25 basis points at its meeting next week. (Reporting by Anant Chandak; Editing by Kim Coghill)
By Anant Chandak
BENGALURU, Feb 3 (Reuters) - Robust growth in India's
services industry eased last month after touching a six-month
high in December, with softening orders spurring caution in
companies' business outlooks 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% next fiscal year, the government said this week, slower
than the 7.0% growth projected for the current year amid
faltering global demand.
But Finance Minister Nirmala Sitharaman said in her budget
speech on Wednesday that despite challenges the Indian economy
was "heading towards a bright future".
The S&P Global India services Purchasing Managers' Index
(PMI) fell to 57.2 in January from 58.5 in
December, missing expectations in a Reuters poll for 58.1 but
above the 50-mark separating growth from contraction for an 18th
straight month.
"As seen earlier in the week from the manufacturing PMI
results, growth across the service sector lost some momentum at
the start of the year," noted Pollyanna De Lima, economics
associate director at S&P Global Market Intelligence.
"Yet, the survey showed us that service providers received
high amounts of new business which helped keep the overall rate
of growth historically prominent. Demand resilience in turn
meant that output also continued to expand at a generally strong
pace."
She also noted that after re-accelerating in December, input
cost inflation in the service sector retreated to a two-year low
in January, aiding a slower and only moderate upturn in selling
prices.
Prices charged rose at the slowest pace since March 2022.
Firms said demand resilience enabled them to pass on additional
cost burdens to clients, though some refrained from hiking their
fees to boost sales.
This was also seen in the country's annual retail inflation
rate, which fell to 5.72% in December from 5.88% in the previous
month.
However, the new export business sub-index contracted for
the first time since October after touching an over three-year
high last month.
The business outlook also took a hit as the overall level of
confidence slipped to a six-month low in January, with 80% of
firms forecasting no change in output levels in the year ahead.
"The latest results highlighted some caution among service
providers, partly evidenced from the vast majority of firms
predicting no change in output from present levels," added De
Lima.
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