Services Activity & Sales Rise At Slowest Rate, In Six Months: S&P Global India PMI

The Indian service sector ended the second fiscal quarter on a weaker footing, but economic growth was sustained, the S&P Global India Services PMI states.

Both new business inflows and output rose at the slowest rates since March, amid inflationary pressures and competitive conditions, which in turn dampened job creation. There was little movement in the rate of input cost inflation from August's 11-month low, while selling prices increased at the weakest pace since March. The data also highlighted a continued revival in business confidence, with sentiment at its highest level in over seven-and-a-half years.

Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said: "The Indian service sector has overcome many adversities in recent months, with the latest PMI data continuing to show a strong performance despite some loss of growth momentum in September. "There were further increases in new business and output, while companies continued to take on extra workers to accommodate for rising demand. September also saw a broad stabilisation of input cost inflation and the slowest upturn in prices charged for the provision of services since March. "However, the steep depreciation of the rupee seen towards the end of the month due to interest rate hikes in the US present additional challenges to the Indian economy. Currency instability poses renewed inflation worries as imported items become more costly, and undoubtedly means that the RBI will continue hiking interest rates to protect the rupee and contain price pressures. "An upturn in inflation could damage consumer spending, dampen business confidence and test the resilience of the Indian service sector in the coming months but, at least for September, service providers were strongly upbeat towards growth prospects."