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Services PMI slows to 52.0 in September

05 Oct 2016 Evaluate

India’s service sector growth slowed down in September as pace of new orders moderated amid competitive pressure and unfavourable weather conditions. Output and new business increased at softer rates in both the manufacturing and service sectors. Meanwhile, prices charged were raised in line with higher cost burdens. The seasonally adjusted Nikkei India Services Business Activity Index was down to 52.0 in September from August’s 43-month high of 54.7, the latest reading pointed to a slower rate of expansion that was moderate overall. Outstanding business at Indian service providers rose for the fourth month running in September and at the quickest rate since July 2014.

The seasonally adjusted Nikkei India Composite PMI Output Index which measures both manufacturing and services, fell to 52.4 in September from 42-month high of 54.6 in August. Nonetheless, the latest above-50.0 reading was the fifteenth in as many months, highlighting ongoing growth in the country. However, on the quarterly basis the PMI Composite Output Index posted its highest reading since the January-March 2015 quarter, suggesting a pick-up in GDP growth.

As per the survey, though the level of new business placed with Indian services firms increased moderately in September, panelists mentioned competitive pressure and unfavourable weather conditions as factors weighing on incoming new work. Further, food and petrol prices continued to climb in September, which placed pressure on operating costs. In response, private sector companies raised their own prices for the second straight month, although inflation remained relatively soft.

Business optimism among Indian service providers fell in September, with the degree of confidence remaining below its long-run average. On the employment front, the survey said both services and manufacturing firms reported stagnant staffing levels so far this year, but given the higher backlog of work across the private sector, businesses may be more willing to take on additional workers.


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