Amid subdued growth in new orders, growth in India's services industry fell a three month low in February, adding to expectations of a rate cut by the Reserve Bank. The seasonally adjusted Nikkei Services Business Activity Index stood at 51.4 in February compared to 54.3 in January, but chalked up its eighth straight month above the 50-level that distinguishes growth from contraction. Demand conditions in the country appear to be weak, as indicated by lacklustre increases in new orders.
As per survey the seasonally adjusted Nikkei India Composite PMI Output index, which maps both manufacturing and services sectors, dipped to 51.2 in February from January's 11-month high of 53.3. Data indicated that output rose in four of the six tracked categories, the exceptions being Post & Telecommunication and Transport & Storage.
The survey further noted that although new orders at services firms continued to rise in February, the rate of expansion eased to the weakest since last November as firms reportedly faced strong competition for new work during the month. A quicker increase in order book volumes in the manufacturing economy was insufficient to prevent growth of private sector new orders from easing to a three-month low. The report further highlighted that Input costs faced by Indian service providers increased during February, as has been the case for five consecutive months. Although the strongest since December 2015, the rate of cost inflation was modest in the context of historical data.