PMI Report For November

India's services sector growth declined in November, registering the slowest pace in the last 13 months, as new business grew at a slower clip. The HSBC's Services Purchasing Managers Index (PMI) for November declined to 52.1 in November, down from 53.8 in the previous month, signaling the slowest rate of expansion in the current 13-month sequence. The index has witnessed significant decline in the last two months after registering the fastest pace of growth in seven months in September. The index has, however, managed to be above the 50-mark which indicates expansion since November 2011. According to ASEAN Leif Eskesen, HSBCs Chief Economist for India, “Business activity expanded at a slower pace in November and new business also grew at a slower clip, which in both cases may partly reflect the fewer working days due to Diwali".

However, service providers remain optimistic about the short-term business outlook. Activity in the upcoming year is forecast to increase in line with maintained brand reputation, stronger marketing and anticipated rise in demand. "The forward-looking business expectation index improved notably, with some respondents reporting of planned business expansion," Eskesen said.

Earlier, an HSBC survey had shown that India's manufacturing sector growth improved in November, registering the fastest pace in five months, driven by a strong pick up in new orders and improved purchasing activity. Accordingly, the HSBC India Composite Output Index – which maps both the manufacturing and services index – stood at 53.2 in November, slightly down from 53.5 in October, the slowest rate of expansion in 12 months.

The Indian economy grew just 5.3 percent from a year earlier in the September quarter, extending its slowdown that began at the start of this year. It is now headed for its weakest full year growth in a decade.The RBI is scheduled to announce its mid-quarter monetary policy review on 18^th December. Reserve Bank governor D.Subbarao has resisted a widespread call for the growth-propping rate cuts for some time now, citing the elevated inflation. Will it bite the bullet this time? Watch this space for more on this.