India’s Services Industry Expansion at Four-Month High
India’s service industry expanded at the quickest pace in four months in November, which may add to the case for the central bank to resume interest-rate increases.
The purchasing managers’ index climbed to 60.1 from 56.2 in October, HSBC Holdings Plc and Markit Economics said in an e- mailed statement today. That’s the highest since July’s 61.7. A reading above 50 indicates an expansion.
Reserve Bank of India Governor Duvvuri Subbarao has said the central bank may not raise interest rates for three months after boosting borrowing costs for the sixth time this year on Nov. 2. The economy expanded 8.9 percent for a second straight quarter in July to September, signaling growth is likely to surpass the government’s 8.5 percent target for the fiscal year.
“Domestic growth remains very resilient,” said Vishnu Varathan, a Singapore-based economist at Capital Economics Ltd. “We are looking for the central bank to resume rate tightening no later than March but we will not be surprised if the move comes much earlier in December or January.”
Food price inflation fell to its lowest level in one and a half years at 8.6 percent in the week ended Nov. 20, according to a report released yesterday. The country received the most rainfall in three years in the June to September monsoon season, helping spur farm production and cap gains in food prices. The RBI expects the benchmark wholesale-price inflation rate may slow to 5.5 percent by March 31 from 8.58 percent in October.
Economic expansion is boosting companies in sectors from telecoms to aviation. Bharti Airtel Ltd., India’s largest mobile phone operator, added three million new customers in October, an increase of 2.1 percent from a month earlier. Passenger traffic at Jet Airways, the nation’s largest domestic airline, jumped 14.3 percent in October.
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