Price pressures, stiff competition and unfavorable public policies have hurt growth, indicated S&P Global India Services PMI
Price pressures, stiff competition and unfavorable public policies have hurt growth, indicated S&P Global India Services PMI
According to the S&P Global India Services Purchase Managers’ Index (PMI), India’s services sector stalled in September as new business and output growth grew at the slowest pace since March 2022, falling from a strong 57.2 in August to 54.3. have arrived. A reading of 50 on the PMI indicates no change in the level of business activity.
September 14. has been marked th According to the survey-based PMI, consecutive months of growth in service sector activity, but price pressures, an increasingly competitive environment and ‘unfavourable public policies’ restricted the uptrend.
growth slowed down employment generation from august, When service players reported the most new jobs in 14 years. Nevertheless, there was a sustained revival in business confidence, with sentiment at its highest level in seven and a half years in September.
Input cost inflation remained close to August levels, the lowest in eleven months, while selling price growth slipped to the lowest rate since March. Transportation, information and communication recorded the sharpest increase in user fees levied by firms, while consumer service players registered the largest increase in cost burden due to higher energy, food, labor and material costs.
“Weak external demand impacted overall sales, with international orders falling further in September. Monthly contractions have been recorded every month since the onset of COVID-19,” S&P Global said in a note.
Polyana de Lima, associate director of economics at S&P Global Market Intelligence, warned that while there was “some slowdown in growth momentum” in September, the rupee depreciates in the coming months and threatens higher inflation.
“… a sharp month-end rupee depreciation on the back of a hike in US interest rates presents additional challenges for the Indian economy. Currency volatility raises renewed inflation concerns as imported goods become more expensive, And this undoubtedly means that RBI will continue to hike interest rates to protect the rupee and control price pressures,” she said.
“Rise in inflation could hurt consumer spending, erode business confidence and test the resilience of the Indian services sector in the coming months, but at least for September, service providers remain optimistic about growth prospects.” We’re strongly excited,” Ms. de Lima reported.
‘Renewed recession’
With manufacturing PMI also softening in September, S&P Global said overall private sector output growth lost momentum and its overall PMI output index fell to its lowest level since March at 55.1 from 58.2 in August. The ‘biggest slowdown’ was seen in the services sector, it said.
S&P Global said overall input cost inflation fell to a 22-month low in September due to a broad-based slowdown in manufacturing and services, while selling price growth was the “weakest in six months”.