Since the demonetisation and GST measure, services sector has been largely hit and now for the Febrauary month, the activity in the services industry has again taken a hit since November 2017 mainly on account of inflation which pulled back the demand.
As against the January Nikkei/IHS Markit Services Purchasing Managers' Index of 51.7, the February index fell to a low of 47.8. The 50-mark on the index separates growth and contraction.
As per the economist at IHS Markit, the recent recovery witnessed by the sector has seen an end with the slump in new business orders to the lowest since the October month. A sub-index that tracks new business fell to a sixth-month low as higher prices that a hit on the demand.
This has come in as the input cost increase pushed the service providers to pass on the increasing cost to the customers.
Manufacturing activity also was hit in the February month which saw input price rise at the fastest pace in over three years time.
With this, the composite PMI which includes both the manufacturing and services activity drops to 49.7 as against 52.5 for the January month.
For the quarter ending December, India regained its position as the fastest growing economy with the GDP rate of 7.2%