India’s Services Activity Falls to Four-Month Low in September

Business activity in India’s services sector eased to a four-month low in September on decreasing demand, a private survey said on Thursday (4).

The steep hike in the prices are expected to put pressure on the services activity further in the near future, the report said.

The seasonally adjusted Nikkei India Services Business Activity Index recorded 50.9 during September. That was down from 51.5 in August and the lowest reading in the current four-month sequence of rising activity.

India’s service sector continued to expand during September, but at a marginal rate amid reports of underwhelming market demand. Price pressures intensified, with higher fuel costs and a stronger US dollar raising the price of imported goods.

Expectations remained in positive territory, while firms added to their staffing levels for a 13th successive month as part of efforts to keep on top of workloads, Nikkei India Services PMI said.

Meanwhile, the seasonally adjusted Nikkei India Composite PMI Output Index also recorded a fall during September. Posting a level of 51.6, the index was down from 51.9 in August and at its lowest level in four months. That was despite a slight improvement in the manufacturing sector, where output growth strengthened to a solid pace.

Weaker growth in the service sector was closely linked by panellists to a broad stagnation of new business. Companies reported that market conditions were underwhelming amid a lack of demand at a time of generally higher prices, Nikkei India Services PMI highlighted.

Although manufacturers recorded a slightly stronger increase in employment, the rise was insufficient to prevent a slowdown in overall jobs growth. Latest data showed the net rise in private sector employment was the slowest in over a year.

Commenting on the Indian Services PMI survey data, Paul Smith, economics director at IHS Markit, said: “Growth of India’s services economy spluttered during September amid reports of faltering demand for services. And despite a slight pick-up in manufacturing output growth during the month, overall private sector activity rose at the weakest rate since May...”

Finally, confidence among the service providers about the year ahead remained inside the positive territory. Around 22 per cent of the survey panel signalled expectations for activity growth, with market demand forecast to strengthen. Marketing and the offering of high-quality services should also bolster activity.