The services sector grew at a slower pace in September with a modest increase in new business orders. The Nikkei India Services Business Activity Index eased to 52 in September from 54.7 in August.
“The health of the Indian private sector economy improved in September, but to a lesser extent than in August…The level of new business placed with Indian services firms increased moderately in September,” said Nikkei in a release on Wednesday.
Despite the sluggish trend, this was the 15th consecutive month of growth on the index. A reading above 50 indicates expansion while that less than 50 denotes contraction.
Meanwhile, in a boost to domestic industry, the Reserve Bank of India on Tuesday cut the repo rate by 25 basis points to 6.25 per cent.
“Over the second quarter of 2016-17, however, the PMI Composite Output Index posted its highest reading since the January to March 2015 quarter, thereby suggesting a pick-up in GDP growth. This would be welcome by policy-makers after the below-expectations figure of 7.1 per cent recorded in the first quarter,” said Pollyanna de Lima, economist at IHS Markit, and author of the report.
Meanwhile, according to the survey, despite the challenging market conditions and competitive pressures that reportedly hampered growth, activity rose in each of the six monitored categories.
“New business declined at 11 per cent of companies (surveyed), which they blamed on unfavourable weather and an increasingly competitive environment,” it said.
The survey also pointed to a slight increase in inflation though it remained below the long-run series average.
“Food and petrol prices continued to climb in September, which placed pressure on operating costs. In response, private sector companies raised their own prices for the second straight month, although inflation remained relatively soft,” said de Lima.
It further said that both services and manufacturing firms reported stagnant staffing levels so far this year. However, given the higher backlog of work across the private sector, businesses may be more willing to take on additional workers.