India’s strong services sector hit a five-year low output in November after four consecutive months of expansion. Business sentiment also slipped to a 10-year low as the flow of new orders turned sluggish.
According to the business survey conducted by Markit and Nikkei, the Purchasing Managers’ Index (PMI) for services sector fell to 50.1 in November, from an eight-month high of 53.2 in October, reflecting broadly unchanged levels of services sector activity across the country.
A reading of 50 divides growth and contraction.
The gloomy trend was also observed in the labour market as employment rose at a pace that was historically muted.
“Services companies in India displayed a lack of optimism with regards to the 12-month outlook for activity, as sentiment dropped to the lowest in the 10-year survey history,” the survey said.
This was the first time that the business expectations sub-index, at 49.9, had fallen below 50.
On the prices front, output prices in the services sector, however, stabilised in November.
As per the analysis by the survey, the downfall has occurred due to fierce competition and poor economic conditions in growth of new work.
Services numbers follow the manufacturing sector PMI, which came on Tuesday, showing that the country’s factory output grew at the slowest pace in 25 months.
Interestingly, according to recent government data, India’s economy grew by 7.4% in July-September quarter, outpacing China to become the fastest growing economy.