Activity in India’s services sector remained subdued for the fourth straight month in October on falling new orders, according to a private survey of purchasing managers. The trend contradicts indications of overall recovery as seen in the core sector growth and the double-digit growth in exports.
The HSBC Purchasing Managers’ Index (PMI) for services posted a reading of 47.1 points in October, the fourth consecutive month of contraction but slightly higher than the four-and-a-half year low of 44.6 in September.
A reading of 50 separates growth from contraction.
Business activity fell in five of the six categories monitored by the survey, with hotels & restaurants registering the sharpest decline.
Services sector, which contributes about 60% to the overall economy, has experienced a sharp deceleration over the past one-and-a-half years. Services sector growth fell to 6.1% in the first quarter of the current fiscal against 7.5% in the corresponding quarter in 2012-13. Decrease in new business flows led to lower level of private sector output, the report based on a survey of 350 private firms suggested. Incoming new work contracted at a slower rate in services, but quickened in manufacturing. Exports grew in double digits for the third consecutive month in September while trade deficit fell to a 30-month low of $6.8 billion. This suggests a strong pickup in manufacturing on recovery in overseas demand. The core sector output expanded at a year’s high of 8% in September.