HSBC: India services PMI inches up to 47.1

Business Standard reported that India's services sector activity witnessed a moderate improvement in October from a 4? year low of 44.6 in September, even while indicating a fourth successive monthly contraction amid economic uncertainty.

The HSBC/Markit Purchasing Managers Index for the services industry inched up to 47.1 in October from 44.6 in September, the fourth successive monthly contraction of services sector output across India. Business activity fell in 5 of the 6 categories monitored by the survey, with the sharpest decline noted in hotels and restaurants.

Mr Leif Eskesen Chief Economist of HSBC India and ASEAN, said, "The continued contraction in services sector activity is testament to the dampening effects of the heightened macroeconomic uncertainty, which is making businesses and consumers more cautious about spending."

The country’s economic growth slowed to 5% during fiscal ended March 31, 2013 from an average of 8% over the past decade. The HSBC/Markit manufacturing PMI showed that India’s manufacturing sector activity contracted for the third straight month in October and stood at 49.6, unchanged since September, indicating a third, albeit marginal, successive deterioration of business conditions across the country.

Accordingly, the HSBC India Composite Output Index, which maps both services and manufacturing activity, rose from 46.1 in September to 47.5 in October, signalling a moderate and slower drop in private sector business activity. Mr Eskesen said, "While activity readings may be stabilising, a notable recovery is not in the cards for a while still, despite the weak growth backdrop, RBI has to keep its inflation guards up to address the lingering inflation pressures."