Amid underwhelming market demand and intensified price pressures, India’s services sector activity fell for the second straight month in September 2018. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index dropped to 50.9 in September from 51.5 in August, signaling the slowest growth in the current four-month sequence of rising activity. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services -- too fell to 51.6 in September from 51.9 in August.
According to the report, a broad stagnation of new business has led to weaker growth in the service sector and market conditions were underwhelming amid a lack of demand at a time of generally higher prices. Further, increase in backlogs of work encouraged service sector companies to again add to their workforce numbers. The report further showed that Information & Communication sectors witnessed a strongest underlying growth in activity and new work, while there were falls seen in the Finance & Insurance and Business Services categories.
On the price front, Indian service providers continued to face higher input costs during the reported month, on account of higher fuel costs and consecutively, the firms raised their selling prices. Average output price inflation was the strongest recorded since April and marked a twentieth successive monthly increase in prices charged. Meanwhile, confidence amongst service providers about the year ahead remained inside positive territory.