Service sector output in November shrinks to three month low owing to sluggish demand, lower customer turnout

India's service output for the month of November contracted for the first time in three months owing to the sluggish demand and lower customer turnout at the back of the Goods and Services Tax (GST) rollout, a private survey showed on Tuesday. 

The Nikkei India Services PMI Business Activity Index plunged from 51.7 in October to 48.5 in November.  A reading above 50 indicates economic expansion, while a reading below 50 points toward contraction. 

As per the survey, underlying data highlighted that service activity fell in response to a drop in new business during November. According to anecdotal evidence, July’s GST continued to affect businesses as it led to sluggish demand and lower customer turnout. As with the case with activity, the rate of contraction in new work was modest. 

A similar survey last week showed manufacturing activity in November expanding at its fastest pace in 13 months. On employment front, despite unfavourable demand conditions, service providers continued to add to their workforce numbers. That said, employment growth eased to a modest pace and further away from September’s recent high.