Services PMI dipped to two months low of 56.5 in Jan

Services sector in India slowed down in January as Purchasing Managers’ Index (PMI) slipped to 56.5 in the said month. This is the lowest since November 2022.
Increase in sales and output were lower which affected PMI. Despite this, new job addition was fastest in over two decades, S&P Global said in a report released on Wednesday. The agency prepares PMI based on responses from purchasing executives of 400 companies. In the PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
According to Pranjul Bhandari, Chief India Economist at HSBC, India’s services sector lost growth momentum in January, although the PMI remained well above the 50-breakeven level. “The business activity and new business PMI indices eased to their lowest levels since November 2022 and November 2023, respectively,” she said. Services sector has the biggest share (over 53 per cent) in Gross Value Added (GVA), a high frequency economic indicator used for supply side of the economy.
Job creation
Talking about job scenarios, the report said that ongoing improvements in new business intakes and rising capacity pressures prompted service providers to recruit additional staff at the start of the last fiscal quarter. According to them, full- and part-time positions had been filled. “The rate of job creation accelerated from December and was among the fastest seen since data collection started in December 2005,” the report said.
Further, it said that overall new business continued to increase strongly, but the rate of expansion softened to the weakest in 14 months. The rise was attributed to strong demand and decisions to offer better prices than rivals. Growth was reportedly curbed by intense competition. In contrast to the trend for total new orders, there was a quicker increase in international sales. Survey participants noted gains from clients in Asia, Europe, the Middle East and the Americas. The overall rate of expansion hit a five-month high, the report said.
“New export business partly countered the downtrend and continued to rebound from a dip in late-2024, in line with official data which showed India’s services exports shinning in December and capturing a larger share of global trade,” Bhandari said.