The third wave of the Covid-19 pandemic has sequentially dampened India’s service sector growth in January 2022.
The seasonally adjusted India Services Business Activity Index came in at 51.5 (index reading) for January, lower than 55.5 in December.
The PMI ranges between 0 and 100, with a reading of above 50 indicating an overall increase compared to the previous month.
Besides, the headline figure pointed to the slowest rate of expansion in the current six month sequence of growth.
The upturn was reportedly stymied by the intensification of the pandemic, the reintroduction of restrictions and inflationary pressures, the IHS Markit India Services PMI report said.
According to survey participants, demand was restricted by the fast spread of the Omicron variant and the reinstatement of curfews in parts of the country.
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“New work intakes increased further at the start of the year, taking the current sequence of expansion to six months. That said, the rate of growth was only slight and the weakest over this period.”
On consolidated manufacturing and services, the Composite PMI Output Index fell from 56.4 in December to 53 in January.
“Both services activity and manufacturing production increased at weaker rates,” the report said.
“Although new orders received by private sector companies continued to rise, the rate of expansion eased to the slowest in the current six-month period of growth. Slower increases were seen among manufacturing firms and their services counterparts.”
Furthermore, January data pointed to a second successive monthly drop in private sector employment.
“Despite being modest, the rate of job shedding accelerated from December. A quicker fall among goods producers was matched by a similar trend among service providers.”
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Pollyanna De Lima, Economics Associate Director at IHS Markit, said that the escalation of the pandemic and reintroduction of curfews had a detrimental impact on growth across the service sector.
“Concerns about how long the current wave of Covid-19 will last dampened business confidence and caused job shedding. Firms were also alarmed about price pressures,” she said.
“On this front, the latest PMI results brought worrying news as input prices increased at the sharpest rate in over a decade.”
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