The HSBC India Composite Output Index posted 53.5 in October, down from the reading of 55.0 in September, to signal a further improvement in private sector activity in India. Although solid, the rate of expansion was the slowest in 11 months.
"The services sector slowed in October, but remained firmly in expansionary territory. Growth in new orders eased slightly and firms scaled back the pace of hiring," HSBC Chief Economist for India and ASEAN Leif Eskesen said.
Unfortunately inflation readings continued to tick up, with higher raw material costs and solid demand
keeping inflation pressures firm. The latter explains why the RBI remains hesitant about easing monetary policy," he further added.
After adjusting for seasonal factors, the headline HSBC Services Business Activity Index - which is based on a single question asking respondents to report on the actual change in business activity at their companies compared to one month ago - posted 53.8 in October, down from reading of 55.8 in September. Although, this signalled robust growth, the rate of expansion was the
slowest since April.
Output in the Indian service sector increased, amid reports of stronger demand. The rate of expansion was solid, but the slowest since April. Manufacturing companies also recorded higher production. The rate of growth was moderate as power shortages contributed to slower growth.
Input cost inflation in the Indian private sector persisted during October, marking a 43-month sequence of rising costs. Input prices were higher at both manufacturers and services companies. The rate of inflation in the service sector was sharp, and the quickest in four months. According to respondents, fuel, labour, gold, oil and gas prices all increased.