India's Private Sector Expands Marginally In November

Those surveyed said the introduction of the goods and services tax had led to ‘subdued demand conditions

Those surveyed said the introduction of the goods and services tax had led to ‘subdued demand conditions

Growth in the United Kingdom dominant services sector slowed last month as companies raised their prices at the fastest pace for almost a decade, according to a closely watched survey.

The monthly IHS Markit/CIPS services Purchasing Managers' Index (PMI), covering businesses from hotels to hairdressers, fell to 53.8 in November from to 55.6 in October, at the low end of most forecasts from economists polled by Reuters. A reading below 50 mark means contraction while, above that indicates expansion, reported Reuters.

"The Caixin PMI readings in November showed the economy has maintained stability, and there was no imminent risk of a significant decline in the growth rate", said Zhong Zhengsheng, director of macroeconomic analysis at CEBM Group, a subsidiary of Caixin Insight Group.

Activity in India's dominant services industry shrank in November as rising prices, driven up in part by the new national sales tax, took a toll on both foreign and domestic demand, a business survey showed on Tuesday.

Amid ongoing reports of cash flow shortages, outstanding business rose at service providers for the eighteenth consecutive month in November. "It is possible that a predominance of the unorganised sector in services, where business models have been shaken by the implementation of the GST, is facing greater challenges", Japanese brokerage house Nomura said in its note. Furthermore, the rate of expansion accelerated to the fastest since October 2016.

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Despite unfavorable demand conditions, service providers continued to add to their workforce numbers in November and the employment growth eased to a modest pace. Moreover, higher taxation led to an increase in overall input prices.

As a result, firms raised their average selling prices at the quickest pace since July. "Business underperformance emanated from July's Goods and Services Tax which contributed to sluggish demand and lower customer turnout".

Services PMI stood at 51.3 in October 2017.

"That said, cost pressures further intensified at service firms (fastest inflation since October 2013), which could constrain output growth in the near term and reduce any central bank appetite to reduce interest rates", Dodhia said.

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