Providers sector loses steam in December; hiring halts

New Delhi, January 6

India’s services sector activity expanded at a slower pace in December as rates of growth in sales eased to a three-month low and staff hiring came to a halt amid weak business optimism, a monthly survey said on Wednesday.

The seasonally adjusted India Services Business Activity Index fell from 53.7 in November to 52.3 in December.

The index was above the critical 50 mark that separates growth from contraction for the third month in a row during December, but pointed to the slowest pace of expansion in the three-month sequence.

Covid to blame

A spike in Covid cases was reported as a key factor restricting growth of new work intakes among service providers, which in turn curbed the rise in output and led to increased business uncertainty about the outlook. —Pollyanna De Lima, Economics associate director, IHS Markit

“Although the news that the service sector remained in expansion mode during December is welcome, the fact that growth lost momentum yet again shouldn’t be disregarded,” said Pollyanna De Lima, Economics Associate Director at IHS Markit. Companies indicated that growth was supported by the securing of new work, though curbed by competitive pressures and the Covid pandemic, the survey noted.— PTI

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