"The HSBC India Composite Output Index declined to its lowest mark in four-and-a-half years to signal a sharp deterioration in business activity across the country's private sector. Whereas the fall in manufacturing production eased, service providers recorded an accelerated decline in output," a release issued by Markit Economics India Services, states.
It further adds that the seasonally adjusted HSBC Services Business Activity Index dipped from 47.6 in August to 44.6 in September, with five of the six sectors covered by the survey posting lower output (except Post & Telecommunication). The latest reading was consistent with a sharp contraction in business activity and one that was the fastest since March 2009.
"Underlying the fall in private sector output was a third consecutive drop in new order levels. Incoming new work contracted sharply and at the quickest pace since February 2009, with panellists commenting on weaker demand and a difficult economic climate. While manufacturers posted a marginal and slower decline in new orders, service providers registered a sharp drop. Furthermore, for the first time in the survey history all six service sub-sectors recorded falling new business," a release from Markit has stated.
Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said,"Service sector activity contracted further in September, with the index dropping to its lowest reading in more than four years as tighter financial conditions and heightened macroeconomic uncertainty weighs on growth. This was led by the sharpest contraction in new business since February 2009 driven by weaker order flows in renting & business activities, hotels & restaurants and financial intermediation. In turn, this led to a small decline in employment and weakening business sentiment. Despite the weak growth backdrop, inflation readings held broadly steady. This, in turn, supports RBI's stepped up efforts to better anchor inflation expectations."