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India Service Sector Growth Slows In January

India's service sector expanded further in January, but at a slower rate, amid a robust increase in employment, survey results from IHS Markit showed on Tuesday.

The Nikkei Services Purchasing Managers' Index, or PMI, fell to 52.2 in January from 53.2 in December. A score above 50 indicates expansion in the sector.

Favorable public policies, enhanced capacities and greater
demand, with the upturn curbed by competitive pressures and election uncertainty supported services growth in January.

The composite PMI, covering both manufacturing and services, remained at 53.6 in January, unchanged from December.

"Output growth in the private sector held steady for now, supported by a strengthening manufacturing industry," Pollyanna De Lima, principal economist at IHS Markit, said.

"Should data for services carry on a downward path, we could see a slowdown in GDP expansion in the final quarter of FY18."

In the service sector, new order growth was the slowest in four months, led by the domestic market, while new orders from abroad expanded at the fastest pace since September. The trend was the opposite in the manufacturing sector.

The employment level in the services sector expanded to a three-month high, underpinned by new business growth and favorable market conditions. Backlogs grew at a faster pace in December.

On the cost front, operating expenses increased in January due to higher prices for freight, fuel, meat and medicine prices. However, cost inflation remained below its long-run average. Meanwhile, input prices across the private sector rose at the second-weakest pace since last April. The increase in prices charged was modest.

Overall business sentiment remained positive, thanks to sales growth forecasts, marketing initiatives and favorable economic conditions. However, optimism faded to the weakest since last October.

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