Faster growth in fresh orders spurred India's services sector, the largest contributor to the economy , to a five month high in November while business sentiment slipped to the weakest level in nearly seven years.
The HSBC's purchasing managers' index for services accelerated to 52.6 points in November, compared to stagnation in the previous month. A reading above 50 on this survey-based index indicates expansion while below that underlines contraction.Business sentiment, however, slipped to the weakest level since mid-2007, according to the report based on a survey of 350 private firms.
The official GDP data released last week for the quarter to September showed slight improvement in the services sector, which grew 6.8% compared to 6.1% in the year-ago period.Overall GDP growth during the quarter was 5.3%, slower than 5.7% in the previous three month period.
As per the survey, the headline HSBC Composite Output Index, which takes both services and manufacturing into account, rose to a five-month high of 53.6 points from 51 in the previous month.Post and telecommunications was the best performing among the broad areas monitored while contractions in activity were registered in financial intermediation, and hotels and restaurants, the report said. According to the government's data, trade, hotels, transport and communication together recorded 3.8% growth in the July-September quarter, faster than 2.8% in the preceding quarter. Banking sector is struggling with low credit offtake due to low investment sentiment.
HSBC's index for manufacturing rose to a 21-month high of 53.3 points in November, backed by strong output growth and robust orders.
The effect of manufacturing shows up in the services sector with a lag.Prices charged by Indian services firms deteriorated for the first time in more than four years in November.The Reserve Bank of India kept interest rates unchanged in its policy meet on Tuesday , but hinted at a cut early next year if inflation continues to ease and the government acts on the fiscal side.