Contrary to the manufacturing sector, the services sector in India accelerated in September, a survey by HSBC indicated.
Result of the survey is known as HSBC Purchasing Manager Index (PMI) and it rose to 51.6 in September from 50.6 in August. The index is calculated on the basis of response received from 350 purchasing managers of private companies. These companies comprise hotels & restaurants, transport & storage, financial intermediation, renting & business activities, post & telecommunication and other services. Index above 50 reflects expansion while below 50 means contraction.
“Services sector activity bottomed out in September thanks to stronger new business flows. However, business sentiment continues to deteriorate after a strong post-election uptick,” Frederic Neumann, Co-Head of Asian Economic Research at HSBC, said. On the positive side, employment rose and inflation fell significantly. A pick up in reform effort is sorely needed to put growth on a firmer footing and address supply side risks to inflation, he added.
Although slower growth in manufacturing did make an impact, services covered a large area. That is why the HSBC Composite Output Index rose to 51.8 in September as against 51.6 in August. The survey said that the latest reading was consistent with a moderate expansion in private sector output. Indian manufacturers signalled a slowdown in output growth, in contrast to the accelerated expansion in activity recorded at services companies.
In terms of services sector, the survey also mentioned that the business activity rose in half of the six monitored subsectors, with by far the sharpest expansion noted in Post & Telecommunications. It noted growth of new businesses for fifth consecutive months. “Moreover, the pace of expansion picked up from August and was solid overall,” it said.