Even though the pace of contraction declined, the services sector activity continued to be weaker for the eighth consecutive month, according to the HSBC Purchasing Managers' Index (PMI) index.

The headline HSBC Services Business Activity Index rose marginally at 48.8 points in February as against 48.3 points in the previous month.

A reading below 50 points indicates contraction.

“The latest reading was consistent with a slight rate of contraction, and one that was the slowest in the current eight-month period of reduction. Where output declined, this was linked by survey respondents to lower levels of incoming new work and economic instability across the country,” HSBC said in a survey.

The survey showed that new orders at Indian services companies continued to decrease in February, leading to a further decline in output.

Meanwhile, workforce numbers remained broadly unchanged since January.

Job creation at hotels and restaurants, ‘other services’ and post and telecommunication companies was offset by reductions in the financial intermediation, renting and business activities and transport and storage sectors.

Pvt sector output up However, private sector output across India rose for the first time in eight months.

The composite index, which includes both manufacturing and services sector reading, showed growth at 50.3 points from 49.6 points in the previous month.

This was mainly due to a year-high expansion witnessed in the manufacturing sector, according to the PMI data released on Monday.

For the services sector, respondents of the survey reported weaker demand, a fragile economy and competitive pressures.

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