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’Poor demand’ conditions weigh on services output: PMI

Author: IANS/Tuesday, March 6, 2018/Categories: Economy

’Poor demand’ conditions weigh on services output: PMI

Mumbai - "Poor underlying demand conditions" pulled the Indian services sector's output to a six-month low during February 2018, a key macro-economic data point showed.

Accordingly, the seasonally adjusted Nikkei India Services PMI (Purchasing Managers' Index) Business Activity Index declined to 47.8 in February from 51.7 in January.

An index reading of above 50 indicates an overall increase in economic activity and below 50 an overall decrease.

"Both activity and new work declined for the first time since November, with rates of contraction the strongest since August, thereby ending the recent recovery experienced by India's service sector. Anecdotal evidence pointed to weak underlying demand conditions in the service economy," said Aashna Dodhia, Economist at IHS Markit, and the author of the report. 

"However, firms seem to believe that the decline is transitory as they raised their staffing levels at the joint-fastest pace since June 2011, in line with positive projections of activity growth."

The data further showed that a lower Services PMI outweighed an upturn in manufacturing production in February.

Consequently, the seasonally adjusted Nikkei India Composite PMI Output Index also declined. The index fell from 52.5 in January to 49.7 in February.

Dodhia said: "Overall, growth of manufacturing output was outweighed by a modest decline in service activity. Meanwhile, an imminent risk to firms' margins are greater fuel prices which materialised into the fastest input cost inflation in the overall economy (manufacturing and services) since July 2014."

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