Comments
Signalling a difficult economic environment, HSBC on Monday said that for the first time in over four years the overall business activity in the private sector in India has contracted.
The HSBC India Composite Index, which maps both services and manufacturing output, clocked 48.4 in July down from 50.9 in June, HSBC said this was indicative of a moderate contraction overall.” It said that “Manufacturers and service providers both recorded lower output levels, amid evidence of falling new business and a difficult economic climate.”
The service sector, which contributes to 60 per cent of GDP saw the sharpest fall.
The services index in July fell to 47.9 down from 51.7 in June. For the first time since October 2011, the index went below the 50 mark. ‘Transport and storage’ and ‘renting and business activities’ were mainly responsible for the overall decline.
Commenting on the service index, Chief Economist for India and Asean at HSBC, Leif Eskesen, said: “Activity in the service sector contracted in July due to drop in new business, which also led to a decline in optimism among the surveyed companies.”
The survey noted that new orders received by private sector companies in India fell in July, amid reports of an increasingly fragile economy.
On the issue of price rise, the survey said inflation gauges softened on the back of weaker demand and tough competition. “While the RBI has to cater to the currency at the moment, it will eventually need to cater more to growth as economic activity continues to soften,” Eskesen said.
The report also said that backlog of work across the Indian private sector rose in July. Manufacturing companies attributed them to power cuts and raw material shortages.
Hiring up
However, the report mentioned that staffing levels increased for the seventeenth consecutive month in July, with companies citing increased business requirements. Employment growth was broad-based with manufacturing and services firms both signalling job creation. The overall rate of increase was, however, modest, it added.
Comments
Comments
Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide by our community guidelines for posting your comments.
We have migrated to a new commenting platform. If you are already a registered user of TheHindu Businessline and logged in, you may continue to engage with our articles. If you do not have an account please register and login to post comments. Users can access their older comments by logging into their accounts on Vuukle.