"Adjusted for seasonal factors, the HSBC Services Business Activity Index fell from 47.2 in November to 46.7 in the latest month, indicating a solid and accelerated rate of contraction. Moreover, this was the sixth consecutive monthly drop in output levels, which is the longest period of continuous reduction since the 2008/2009 global financial crisis," an HSBC PMI release states.
Underpinning the latest fall in services output was a solid decrease in incoming new work. New business contracted at the quickest pace since September, with panellists reporting an increasingly fragile economy and competitive pressures. There were a few mentions that the upcoming elections had also contributed to the latest drop in new orders. Across the private sector as a whole, new business decreased at a faster, but moderate pace.
Commenting on the India Services PMI survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said:
"The service sector continues to face head winds, with weakening new business dragging down activity. On a positive note, inflation pressures are easing and optimism about the coming year is rising."
Four of the six broad areas of the service economy registered lower output volumes, while new business contracted in five categories. As with the trend for output, the sharpest decline in new orders was noted at Hotels & Restaurants. The Post & Telecommunication sub-sector remained resilient, with growth of both business activity and new orders recorded.
Outstanding business at both service providers and manufacturers increased in December, leading to a further accumulation of unfinished work in the Indian private sector. Although modest, the overall rate of increase was above the long-run survey average.
December data indicated that private sector employment rose. The latest increase in payroll numbers was broad-based with both manufacturers and service providers posting job creation.