Index stood at 44.6 points in September, the lowest since March 2009
In a major setback, the services sector, which occupies the largest share in the Indian economy, contracted at the steepest pace since March 2009, according to the widely-tracked HSBC Purchasing Managers' Index (PMI) released today.
The services PMI continued to contract for third time in a row in September and stood at 44.6 points from 47.6 points in August, when it was the lowest since March 2009. In that month, the PMI services had stood at 43.7 points. The services PMI has been deteriorating since July this year.
Leif Eskesen, chief economist for India and the Association of Southeast Asian Nations at HSBC, said: "This was led by the sharpest contraction in new business since February 2009 driven by weaker order flows in renting & business activities, hotels & restaurants and financial intermediation"
This takes the average quarterly PMI servies to 48.5 points in the second quarter of 2013-14 against 52 points in the first quarter.
The composite PMI, which takes into account manufacturing and services, fell sharply to 46.1 points in September from 47.6 points in the previous month. "The latest reading was consistent with a sharp contraction in business activity and one that was the fastest since March 2009", said Markit Economics, a financial information firm which compiles the PMI data.
A reading above 50 indicates expansion, while one below 50 means contraction.
Five out of the six sectors covered by the survey posted lower output in September, exception being Post and Telecommunication.
"Incoming new work contracted sharply and at the quickest pace since February 2009, with panellists commenting on weaker demand and a difficult economic climate", said the firm.
The business sentiment was also the weakest since February 2009. However, there was some optimism on output growth in the coming year.
As a result of reduction in incoming form, the private sector firms cut their workforce numbers, Markit Economics said.
There were instances of rising prices of raw materials, fuel, food and transport costs. "Despite the weak growth backdrop, inflation readings held broadly steady. This, in turn, supports RBI's stepped up efforts to better anchor inflation expectations”, said Eskesen.
Raghuram Rajan, in its mid-term policy review had stated that inflation remained a concern and due to which he had raised the repo rate by 25 basis points to 7.5%.
The manufacturing PMI released on Monday, although marginally up from the previous month, also contracted for the second consecutive month and stood at 49.6 points from 48.5 points in the previous month.
In the previous month, for the first time since March 2009 both services and manufacturing PMI contracted in the same month.
The services PMI continued to contract for third time in a row in September and stood at 44.6 points from 47.6 points in August, when it was the lowest since March 2009. In that month, the PMI services had stood at 43.7 points. The services PMI has been deteriorating since July this year.
Leif Eskesen, chief economist for India and the Association of Southeast Asian Nations at HSBC, said: "This was led by the sharpest contraction in new business since February 2009 driven by weaker order flows in renting & business activities, hotels & restaurants and financial intermediation"
This takes the average quarterly PMI servies to 48.5 points in the second quarter of 2013-14 against 52 points in the first quarter.
The composite PMI, which takes into account manufacturing and services, fell sharply to 46.1 points in September from 47.6 points in the previous month. "The latest reading was consistent with a sharp contraction in business activity and one that was the fastest since March 2009", said Markit Economics, a financial information firm which compiles the PMI data.
A reading above 50 indicates expansion, while one below 50 means contraction.
Five out of the six sectors covered by the survey posted lower output in September, exception being Post and Telecommunication.
"Incoming new work contracted sharply and at the quickest pace since February 2009, with panellists commenting on weaker demand and a difficult economic climate", said the firm.
The business sentiment was also the weakest since February 2009. However, there was some optimism on output growth in the coming year.
As a result of reduction in incoming form, the private sector firms cut their workforce numbers, Markit Economics said.
There were instances of rising prices of raw materials, fuel, food and transport costs. "Despite the weak growth backdrop, inflation readings held broadly steady. This, in turn, supports RBI's stepped up efforts to better anchor inflation expectations”, said Eskesen.
Raghuram Rajan, in its mid-term policy review had stated that inflation remained a concern and due to which he had raised the repo rate by 25 basis points to 7.5%.
The manufacturing PMI released on Monday, although marginally up from the previous month, also contracted for the second consecutive month and stood at 49.6 points from 48.5 points in the previous month.
In the previous month, for the first time since March 2009 both services and manufacturing PMI contracted in the same month.
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