A gauge of India's services sector signalled growth for the fourteenth consecutive month, but highlighted the “weakest rate of expansion” since March.
The India Services Business Activity Index, compiled by IHS Markit, stood at 54.3 in September against 57.2 in August, according to a media statement. A reading above 50 indicates expansion in business activity.
The Composite PMI Output Index stood at 55.1 against 58.2 the month before, also pointing to the weakest rate of expansion since March, but above its long-run average. Manufacturers recorded a stronger upturn than service providers, though growth softened for both.
The Indian service sector ended the second fiscal quarter on a weaker footing, but economic growth was sustained, the statement said. New orders displayed a similar pattern to business activity, rising for the fourteenth month in a row but at the slowest pace since March.
The fastest expansions were seen in consumer services and the slowest in transport, information and communication. Companies linked higher output to greater bookings, events and client bases. The upturn was reportedly restricted by price pressures, an increasingly competitive environment and unfavourable public policies, it said.
There was little movement in the rate of input cost inflation from August's 11-month low, while selling prices increased at the weakest pace since March.
The steep depreciation of the rupee seen towards the end of the month due to interest rate hikes in the U.S. present additional challenges to the Indian economy. Currency instability poses renewed inflation worries as imported items become more costly, and undoubtedly means that the RBI will continue hiking interest rates to protect the rupee and contain price pressures.Pollyanna De Lima, Economics Associate Director, S&P Global Market Intelligence
Weak external demand weighed on overall sales, with international orders declining further in September. Monthly contractions have been recorded in each month since the onset of Covid-19. Service providers signalled a further increase in their operating expenses during September, owing to higher energy, food, labour and material costs.
The data also highlighted a continued revival in business confidence, with sentiment at its highest level in over seven-and-a-half years.
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