\nThe Nikkei Markit India Composite Purchasing Managers\u2019 Index (PMI) Output Index declined to 49.1 last month — down from October\u2019s 45-month high of 55.4.
\nAn index reading of above-50 indicates an overall increase in economic activity, and below-50 an overall decrease.
\nThe contraction in the key macro-economic data was witnessed after services sector and new business across the private sector as a whole decreased.
\nThe report on the Composite PMI Output Index observed that though the scarcity of rupee notes weighed on manufacturing performance, new order growth was sustained. However, the rise was insufficient to offset the downturn in services and new business across the private sector.
\nThe seasonally adjusted Nikkei India Services Business Activity Index, too, registered a contraction at 46.7 during last month, down from October\u2019s 54.5.
\nThis is the first time that the index contracted since June 2015 and pointed to the sharpest reduction in output for almost three years.
\n\u201cThe latest set of gloomy PMI figures for the Indian service sector shows that companies were heavily impacted by the 500 and 1,000 rupee notes ban,\u201d Pollyanna De Lima, Economist at IHS Markit was quoted as saying in a statement.
\n\u201cCash shortages resulted in fewer new business intakes, which in turn caused a fall in activity and ended a 16-month sequence of expansion.\u201d
\nAccording to De Lima, the disruption is expected to be short-lived, however, with many panellists in the survey anticipating a pick-up in activity as these high-value banknotes are replaced and black-market firms end their operations.
\n\u201cIn fact, business confidence improved to a three-month high. On a positive note, the reduction in money supply curbed inflation in November,\u201d the economist at IHS Markit explained.
\n\u201cInput costs facing service providers were broadly unchanged, which encouraged firms to lower their selling prices. In light of these numbers, further cuts to the benchmark rate are expected.\u201d
\nOne of the key factor contributing to the downward movement in the PMI was a softer expansion in new business inflows at services firm.
\n\u201cThe fall in new work was the first in 17 months and the steepest in over three years. Panellists indicated that cash shortages restricted client bookings,\u201d the statement said.
\n\u201cIndian service providers expect activity to rise over the next 12 months, with the degree of optimism signalled in November being the highest since August.\u201d
\nThe statement elaborated that anticipated replacement of high-value rupee notes, improved advertising campaigns, favourable government policies and the withdrawal of unregulated companies from the market boosted sentiment during the latest survey period.
\n\u201cInput costs in the Indian service sector were broadly unchanged in November as falling prices for petrol and raw materials acted to offset higher staff salaries,\u201d the statement added.
\nOn last Thursday, the Nikkei Markit India Manufacturing PMI had shown a slowdown. The index rose to 52.3 in November, however, lower than the 22-month high of 54.4 in October.<\/p>\n","protected":false},"excerpt":{"rendered":"