India services activity slumped in November on higher prices
Activity in India's dominant services industry shrank in November as rising prices, driven up in part by the new national sales tax, took a toll on both foreign and domestic demand, a business survey showed on Tuesday.
November's Nikkei/IHS Markit Services Purchasing Managers' Index fell to 48.5 - its lowest since August - from 51.7 in October, well below the 50 mark that separates expansion from contraction.
After initial confusion among firms over the pricing of their products, firms are now better adjusted to the Goods and Services Tax (GST) and are gradually passing higher input costs to end-consumers.
That, however, has hurt demand still recovering from the government's currency clampdown late last year. The survey showed the new business sub-index, a proxy for both foreign and domestic demand, slumped to 48.3 last month from October's 51.5.
Although a sister survey showed factory activity expanded in November at the fastest pace since just before the government's currency ban, a composite PMI, which takes into account both manufacturing and services activity, fell to 50.3 last month from 51.3.