Services output declines

India's services sector slowed in October –– registering the slowest pace of growth since April –– amid decline in new orders and hiring levels, an HSBC survey said.
The HSBC’s Services Purchasing Managers Index (PMI) for October declined significantly to 53.8 in October from 55.8 in September.
Since November 2011, the index has kept above the 50 mark, which indicates expansion. Thus, the HSBC India Composite Output Index, which maps both services and manufacturing activity, stood at 53.5 during the month, down from September reading of 55.
Output in the Indian service sector increased, amid reports of stronger demand and the rate of expansion, though “solid”, was slowest since April. However, service providers remain optimistic about the short term business outlook.
Earlier, an HSBC survey had shown that India’s man ufacturing sector improved in October, driven by new orders, but persistent power shortages weighed on production.
Moreover, the outstanding business rose reportedly due to delay in payments in October, which to some extent could also explain the slower pace of growth in business activity.
Inflation as measured by all indices has remained elevated and WPI-based inflation has remained above RBI’s comfort zone of 5 to 5.5 per cent for quite some time. In the mid-year monetary policy review, RBI left key interest rate unchanged but reduced CRR by 0.25 per cent to infuse additional liquidity of up to Rs 17,500 crore into the system.