Services output contracts in August: HSBC Services PMI

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Services output contracts in August: HSBC Services PMI
The services sector which makes a significant contribution to India's GDP contracted in August as falling growth now shifts to the services sector.

The HSBC Services PMI output fell to 47.6 from 48.4, reflecting faster contractions in India's Services sector.

"Business activity in the Indian private sector fell at a moderate and accelerated pace in August, reflecting faster contractions of both manufacturing and services output. Down from 48.4 to 47.6 in August, the HSBC India Composite Output Index posted below the 50.0 no-change mark for the second consecutive month. Evidence from panellists highlighted falling volumes of incoming new work and tough economic conditions," according to a release from HSBC, India, Services, PMI.

Out of the six monitored sub-categories, four recorded a reduction in business activity, the exceptions being Financial Intermediation and Post & Telecommunication. The fastest contraction was registered at Transport & Storage companies.

Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said, "Service sector activity slowed further in August led by weaker new business flows, which led to a slowdown in employment growth and a decline in sentiment among service sector companies.

Meanwhile, price pressures firmed as input costs rose and were passed on to final prices. The numbers we have seen so far for July and August for both the manufacturing and service sectors point to a further slowdown in GDP growth during the third quarter."

Input cost inflation in the Indian private sector accelerated to the sharpest in six months. Whereas prices paid by services firms rose at a faster pace, manufacturers saw a slowdown in cost inflation. Service providers indicated that a range of raw materials, fuel, transport and labour costs increased over the month. Goods-producers reported higher prices paid for imported raw materials, in part due to a weaker currency.

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