The country’s services sector expanded at a slower pace in September as higher fuel costs and stronger US dollar made imported goods expensive.
The seasonally-adjusted Nikkei India Services Business Activity Index recorded 50.9 in September, down from 51.5 recorded in August. This is also the lowest reading in the current four-month sequence of rising activity. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.
According to the survey report released on Thursday, expectations remained in positive territory, while firms increased their staffing levels for 13th successive month as part of efforts to keep on top of workloads.
The service sector continued to expand during September, but at a marginal rate amid reports of underwhelming market demand. “Price pressures intensified, with higher fuel costs and a stronger US dollar raising the price of imported goods,” it added.
Paul Smith, Economics Director at IHS Markit and author of the report, said that the growth of India’s services economy spluttered during September amid reports of faltering demand. “And despite a slight pick-up in manufacturing output growth during the month, overall private sector activity rose at the weakest rate since May,” he noted.
IHS Markit compiles the survey on a monthly basis. According to the survey, companies reported that the market conditions were underwhelming due to lack of demand at a time of generally higher prices.
Broad sector data showed that the underlying growth in activity and new work remained strongest in information and communication sector, while finance and insurance and business services categories witnessed a decline.
Although manufacturers recorded a slightly stronger increase in employment, the rise was insufficient to prevent a slowdown in overall jobs growth. Latest data showed the net rise in private sector employment was the slowest in over a year.