Underscoring the prolonged period of slowdown in Asia's third-largest economy, the activity in services sector, which makes up of nearly 60% of country’s economic output shrank at the fastest pace in more than four years in September. The HSBC Services Purchasing Managers' Index (PMI), compiled by Markit, slipped from 47.6 in August to 44.6 in September, it’s weakest since April 2009. The latest figures, which mark the straight third reading below 50, the threshold between growth and contraction, is consistent with a sharp contraction in business activity and one that was the fastest since March 2009.
The survey indicated that all six monitored sub-categories, recorded lower output. Third consecutive drop in new order levels explains the underlying fall of the private sector output. Incoming new work contracted sharply and at the quickest pace since February 2009 mainly driven by weaker order flows in renting & business activities, hotels and restaurants and financial intermediation.
Meanwhile on employment front, private sector in response to lower volumes of incoming new work reduced their workforce numbers. However, the marginal fall in employment was broad-based, with both manufacturers and service providers reporting job shedding for the first time in 19 months.
Thus, the PMI, which has clocked the worst quarter for the Indian services sector in turn has ignited fears that growth in the three months to September will be weaker than April through June. Further, September data also points to a weaker degree of positive sentiment in the Indian service sector, with the index measuring business sentiment dropping to its lowest mark since February 2009. Meanwhile, the survey supports the RBI’s stepped up efforts to better anchor inflation expectations, given the inflation reading hold steady even in the backdrop of weak growth.
Source:-www.berkeleygains.com
The survey indicated that all six monitored sub-categories, recorded lower output. Third consecutive drop in new order levels explains the underlying fall of the private sector output. Incoming new work contracted sharply and at the quickest pace since February 2009 mainly driven by weaker order flows in renting & business activities, hotels and restaurants and financial intermediation.
Meanwhile on employment front, private sector in response to lower volumes of incoming new work reduced their workforce numbers. However, the marginal fall in employment was broad-based, with both manufacturers and service providers reporting job shedding for the first time in 19 months.
Thus, the PMI, which has clocked the worst quarter for the Indian services sector in turn has ignited fears that growth in the three months to September will be weaker than April through June. Further, September data also points to a weaker degree of positive sentiment in the Indian service sector, with the index measuring business sentiment dropping to its lowest mark since February 2009. Meanwhile, the survey supports the RBI’s stepped up efforts to better anchor inflation expectations, given the inflation reading hold steady even in the backdrop of weak growth.
Source:-www.berkeleygains.com