Services stay in expansion mode in Nov.

Amid reports of higher fuel, labour, material, retail and transportation costs, Indian service sector still remained in an expansion zone, though there was a slight drop in the index for the month of November. However, emerging omicron variant remains a major concern, especially in the tourism sector, a private analytical survey showed on Friday.

“The Covid-19 pandemic and travel restrictions reportedly caused a further drop in international demand for Indian services. The latest fall in external sales was the twentyfirst in successive months, although among the slowest over this period," the survey said.

The survey released by IHS Markit showed that Purchasing Managers’ Index (PMI) for services eased to 58.1 in November from 58.4 in October. A reading above 50 indicates expansion in economic activity. The survey further said that the overall rate of inflation quickened from October and was the second-strongest in almost a decade.

Though the omicron variant remains a major concern, the survey, indicated that the Indian service sector continued to strengthen, with a substantial upturn in new orders underpinning output growth. "The upturn reflected sustained increases in new work and ongoing improvements in market conditions," it said.

Commenting on the latest survey results, Pollyanna De Lima, economics associate director at IHS Markit, said, "The recovery of the Indian service sector was extended to November, with a robust improvement in sales enabling the secondfastest rise in business activity in nearly ten-anda-half years. Companies were somewhat convinced that output levels would continue to increase in the year ahead, but worries regarding inflationary pressures weighed on confidence again."