Macroscope – Services PMI for the month November 2020

What is the latest Services PMI reading?

India Services PMI fell to 53.4 in November 2020 from 54.1 in October 2020. However, the reading maintained growth trajectory for 2nd month in a row.

A reading above 50 denotes expansion and below 50 denotes contraction.

Consecutive growth in Services PMI indicates economy’s sustained momentum on its path to recovery. Unlocking 4.0 is yielding positive results by aiding in expedited stabilization of demand and supply dynamics post the coronavirus-triggered lockdown.

The recovery reflects upturn in business activity growth and the 1st rise in employment in 9 months. Positive sentiments climbed to highest levels since February, banking on expedition of New Normal due to quick discoveries and quicker recoveries in the vaccine world.

The loosening of covid-induced lockdowns resulted in rise in new business inflows.

Domestic demand, festive season and full inventories drove growth over the month.

International markets on the other hand continued to see subdued sales for 9th straight months (as reflected by exports contraction) due to new covid waves and travel restrictions.

Increased order accumulations and operating capacities sent mixed signals, as demand showed fervor but supply showed fever.

Fears of looming virus continues to channel-choke movement of goods and services across the country.

Employment saw increase for the 1st time since pandemic hit, to combat pick-up in order flows. Even with marginal rate of employment growth, the ending of 8-month job shedding activity marks a big plus in country’s efforts to alleviate itself of viral virus.

Input prices continued to increase in November, with inflation accelerating to a 9-month high and outpacing its long-term average. Selling prices followed suit, rising by par-plus rate. This marked the quickest increase in price rise since July 2017.

Looking ahead, services firms are confident of rise in business activity in coming 12 months, with figures coming in at 9-month high.

As is seen globally, manufacturing PMI continues to out-perform its services counterpart, courtesy of the latter being hit harder by Covid-19.

The coming times can see risk tilting towards the upside due to possible faster recoveries in population mobility and household spending. Agencies revising their growth estimates for India in short-term bodes well for country’s macro indicators.

The key risks will continue to be unforeseen events resulting from the virus, and current steep rates of inflation.

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