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India’s Service Sector Registers Slower Growth in August

India recorded a growth at a slower pace across its service sector in August 2018 due to weak demand and rise in input costs which turned into a hurdle for hiring, according to a private research data released on Wednesday (05).

The latest data fell from July’s 21-month peak of 54.2 to 51.5 in August, signalling the slowest growth in the current sequence.


The firms raised their staffing levels at the slowest pace since last November. On a positive note, business confidence rose to the highest level since May, said the seasonally adjusted Nikkei India Services Purchasing Manager Index (PMI).

“August data signalled that the pace of growth in India’s service economy cooled from July’s recent peak. This was matched by the slowest expansions in new business and employment since May and November 2017 respectively,” said Aashna Dodhia, Economist at IHS Markit, Commenting on the latest PMI data.

“Input cost inflation in the service sector accelerated to the sharpest since November 2017, fuelled by higher oil-related prices. Meanwhile, firms faced pressure on their margins as they were unable to fully pass on higher cost burdens to price-sensitive customers,” he added.

New business placed at Indian service providers rose for the sixth consecutive month in August.

Service companies raised their average selling prices at a marginal pace that was close to July’s 16 month low. Latest survey data suggested that firms were restricted in their ability to fully pass on higher cost burdens to clients due to competitive conditions. As has been the case since December 2015, business confidence remained positive in August, according to the data released.

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