India PMI November 2020

India: Private sector PMI falls in November

The composite Purchasing Managers’ Index (PMI) produced by IHS Markit fell from 58.0 in October to 56.3 in November. Nevertheless, the PMI remained above the 50-threshold indicating an increase in business activity from the previous month.

The services PMI ticked down to 53.7 in November—the second expansion since March—from 54.1 in October, and missed analysts’ expectations of a 55.5 reading. The relaxation of lockdown restrictions and firming demand conditions continued to underpin new orders and output growth but the pace of the expansion softened in November. That said, employment levels and business sentiment increased notably as a majority of respondents expected stronger output a year ahead due to positive news surrounding the roll out of a Covid-19 vaccine.

On the manufacturing side, the PMI dipped to 56.3 in November from 58.9 in October as output expanded at a softer pace than the roughly 13-year high set in the previous month. The ongoing recovery in demand—particularly from abroad—kept new orders growth afloat albeit it was the softest pace in three months. Moreover, employment levels decreased at virtually the same pace as in October, while outstanding work orders increased in November.

Commenting on the latest PMI data, Pollyanna De Lima, economics associate director at IHS Markit, said:

“Low interest rates aimed at mitigating the negative impacts of COVID-19 on the economy and the latest rise in services employment are supportive factors for domestic demand. However, a pick-up in inflationary pressures could threaten the recovery. The PMI results for November showed the strongest increase in service sector input costs for nine months, which brought in the sharpest upturn in fees for over three years.”

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