Services sector contracts for 2nd month on cash-crunch: PMI
|Source: The Hitavada Date: 05 Jan 2017 09:10:42|
REELING under cash-crunch, services sector contracted for the second consecutive month in December as the demonetisation move took a heavy toll on business activities and led to the sharpest fall of over three years in new orders, a monthly survey showed Wednesday.
The Purchasing Managers’ Index (PMI) survey further showed that the business confidence slumped to the third-lowest level in its 11-year history, while suggesting that
any imminent recovery was unlikely from the demonetisation-triggered downturn.
The Nikkei India Services PMI, which tracks services sector companies on a monthly basis, stood at 46.8 in December, largely unchanged from November’s 46.7 reading. A reading above 50 shows expansion while a score below this level denotes contraction.
The index had slipped into the contraction territory in November and remained in that zone in December as the demonetisation move, involving scrapping of high-value old currency notes, led to the sharpest fall in new business since September 2013.
This follows another PMI dataset released on Monday that showed that the manufacturing sector also contracted in December, its first shrinkage in a year, which together suggested towards a slowdown in the overall GDP growth rate.