India’s Services Growth Drops in December at 55.5 PMI

India’s services sector grew for a fifth continuous month in December. Purchasing Managers’ Index (PMI) decreased to 55.5 in December from 58.1 in November. Export business continued to drop as travel restrictions due to the Covid-19 pandemic weighed on international sales. The Reserve Bank of India (RBI) is not expected to increase interest rates until the next quarter as inflation has been within its 2 to 6 per cent target range since July 2021.

Several companies shortened their workforce in December due to a lack of skilled labour, which broke the three-month hiring trend. Delay surrounding the outlook, and a lack of pressure on capacity, led to a drop in employment during December 2021. But, the decline was marginal, and the recovery can happen this year as services remain favourable. The overall composite index dropped to 56.4 in December from 59.2 in November but was supported by strong manufacturing in the industry.

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