India's services PMI rises to 51.7 in January 2018

Good news for Indian economy Services sector sees fastest growth in 3 months in Jan shows PMI

The headline Nikkei Malaysia Manufacturing Purchasing Managers' Index (PMI) - which measures the economic health of the manufacturing sector - rose from 49.9 in December to 50.5 in January this year.

The UK gilts gained Monday after the country's services PMI for the month of January disappointed market expectations, thus pushing debt prices higher.

The index remained above the 50 threshold that separates expansion from contraction for the 16th consecutive month.

Mr Williamson also noted: "While the fourth quarter PMI readings were historically consistent with the economy growing at a resilient quarterly rate of 0.4-0.5 per cent, in line with the recent GDP estimate, the January number signals a growth rate of just under 0.3 per cent".

"The recovery across India's service sector continued during January, with growth in output picking up to the joint-strongest since June 2017 as underlying demand conditions improved", said Aashna Dodhia, Economist at IHS Markit, and author of the report but cautioned that the overall performance of the service sector remained weaker than the long-run growth trend.

India's economy is predicted to grow at a four-year low of 6.6 percent this fiscal year ending in March, according to a Reuters poll last month.

Companies continued to take on extra staff at a marked pace, albeit one that was the weakest in eight months. "This supported forecasts of further economic growth by panelists, with business optimism strengthening to a 56-month high".

"Banks normally dole out more credit at the start of the year, as opposed to being restrained by the lending quota last year", said Wendy Chen, a Shanghai-based economist at Nomura.

Cost burdens from higher prices for fuel, insurance, transport and food, lifted input costs, but at their slowest pace since September 2016, suggesting inflationary pressures were beginning to ease.

Despite the improvement in services activity, a composite PMI, which tracks both manufacturing and services businesses, fell to 52.5 from 53.0 in December.

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