December Composite PMI Falls, Contraction Continues

The Indian private sector doesn’t seem to be coming out of the existing gloominess anytime soon as the HSBC Markit Purchasing Managers’ Index (PMI) for the month of December 2013  was reported at 48.1.December Composite PMI Falls, Contraction Continues

The Composite (Services + Manufacturing) Output Index was posted below 50.0 threshold level for the sixth consecutive month.

Any figure that comes out to be less than 50 suggest contraction and more than 50 is expansion.

Earlier the Manufacturing Index was reported to be at 50.7, which is just marginally better in comparison.

Some imperative points from the report:

  • Declined output volumes were noted across four of the six broad areas of the service economy with Hotels & Restaurants sector being battered the most. New business contracted in five categories.
  • December data indicates that the private sector employment rate has definitely increased but moderate reduction was observed in terms of new orders across private sector.
  • The cost of price inflation was low and weakest since the month of July. Input price inflation has eased to a six month low number.
  • Addition cost burdens were definitely passed on in form of increase in tariffs but these were just marginal.
  • The service providers in the market are generally optimistic and expectant about the better days ahead in 2014. There is a belief that demand is only going to improve post Lok Sabha elections.

We should wish the coming days bring much more demand and guarantee better working conditions both for the service and manufacturing economy in the country!

Ashish Pandey

I am a business and finance journalist who is currently employed at Financial Express and previously at Zee News. My areas of interest include business and foreign policy. You can reach me on Twitter at @ashuvirgo1984 or @eFundsPlus.

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