India's service sector activity deteriorated for the first time in seventeen months in November on cash shortages , survey figures from IHS Markit showed Monday.
The seasonally adjusted Nikkei Services Business Activity Index, fell to 46.7 in November from 54.5 in October. A reading below 50 suggests contraction, while any score above 50 indicates expansion in the sector.
"The latest set of gloomy PMI figures for the Indian service sector shows that companies were heavily impacted by the 500 and 1,000 rupee notes ban," Pollyanna De Lima, Economist at IHS Markit, said.
The Composite Purchasing Managers' Index, also fell to 49.1 in November from previous month's 45-month high of 55.4.
New business inflows at services firms declined at the fastest pace in three years in November amid demonetisation effects. Although the scarcity of rupee notes also weighed on manufacturing performance, new order growth was sustained.
The rate of job creation across the service sector was marginal in November. Manufacturing jobs were also little-changed from October.
On the price front, input prices in the Indian service sector were broadly unchanged in November as falling prices for petrol and raw materials acted to offset higher staff salaries. Cots pressures at manufacturing industry also eased during the month.
Across the private sector as a whole, input cost inflation softened to the weakest since August.
However, optimism across services sector rose to a three-month high in November. The anticipated replacement of high-value rupee notes, improved advertising campaigns, favorable government policies and the withdrawal of unregulated companies from the market all boosted sentiment during the latest survey period.
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