Pointing to a further slowdown in Indian economy, the growth in services sector, which make up nearly 60% of country’ economics output, eased further during August on account of decline in new businesses amid tough economic conditions. The HSBC services Purchasing Managers’ Index (PMI), based on a survey of around 400 companies fell to 47.6 in August from 47.9 in the previous month, the weakest since April 2009. The survey indicated that four out of the six monitored sub-categories, recorded a reduction in business activity with fastest contraction being witnessed in Transport & Storage sub-sector.
Slowdown in service sector activity because of the decline in new business orders suggested that an uncertain economic outlook had dampened client confidence and also made services firms less optimistic about the year ahead. A sub-index for the Indian PMI that measures new businesses fell to 46.6 in August from 47.8 in July, the lowest in over four years. Further, decline in new business also slowed down the employment growth in Indian service sector. Similarly, the HSBC India Composite Output Index, which measures activity in both the manufacturing and services sector, came down to 47.6 from 48.4 in June, indicating moderate contraction overall.
Further, August data signaled broadly a steady inflation reading as input prices continued the trend that started in April 2009. Service providers indicated that a range of raw materials, fuel, transport and labour costs increased over the month. However, overall rate of charge inflation eased to the weakest in three months as firms raised their selling prices only marginally in August, amid reports of increased competitive pressures. The overall unfinished work fell for the first time since July 2012, as lower new business levels forced the service firms to work on their backlogs in August.
Slowdown in service sector activity because of the decline in new business orders suggested that an uncertain economic outlook had dampened client confidence and also made services firms less optimistic about the year ahead. A sub-index for the Indian PMI that measures new businesses fell to 46.6 in August from 47.8 in July, the lowest in over four years. Further, decline in new business also slowed down the employment growth in Indian service sector. Similarly, the HSBC India Composite Output Index, which measures activity in both the manufacturing and services sector, came down to 47.6 from 48.4 in June, indicating moderate contraction overall.
Further, August data signaled broadly a steady inflation reading as input prices continued the trend that started in April 2009. Service providers indicated that a range of raw materials, fuel, transport and labour costs increased over the month. However, overall rate of charge inflation eased to the weakest in three months as firms raised their selling prices only marginally in August, amid reports of increased competitive pressures. The overall unfinished work fell for the first time since July 2012, as lower new business levels forced the service firms to work on their backlogs in August.
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