"Up from 48.1 in December to 49.6 in January, the seasonally adjusted HSBC India Composite Output Index indicated a seventh consecutive monthly drop in private sector activity. That said, the rate of contraction was marginal and the weakest in that sequence. Whereas manufacturing production growth accelerated, output at services companies fell again," a release states.
The headline HSBC Services Business Activity Index increased from December's 46.7 to 48.3 in January, signalling a moderate rate of output contraction that was the weakest in the current seven-month sequence of decrease. Panellists cited tough economic conditions, political issues and lower new order levels as the main reasons behind the fall in output.
Service providers reported falling new business received for the seventh month running in January, with respondents commenting on increased competition for new work, deteriorating confidence among clients and weaker underlying demand. Nonetheless, the rate of contraction was slight and the slowest in that sequence. Manufacturing new orders rose at the quickest pace since March 2013. Incoming new work across the Indian private sector as a whole fell, albeit fractionally.
Commenting on the India Services PMITM survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said:
"Service sector activity remains weak and broad based, although Post & Telecommunication led the softening in January. Meanwhile inflation pressures firmed, with input prices rising at a faster pace. Despite the weak growth backdrop, the RBI has to stick to its hawkish bias to get inflation under control and through this eventually pave the way for a recovery in economic activity."
Outstanding business in the Indian service sector fell in January, while an accumulation was recorded at manufacturers. Across the private sector as a whole, backlogs were unchanged from the levels recorded one month previously.