Ser­vices sec­tor shrinks on muted de­mand

The Times of India (New Delhi edition) - - Times Global -

Ben­galuru: In­dia’s ser­vices sec­tor slipped into con­trac­tion in Septem­ber as new busi­ness or­ders fell for first time since early 2018, ac­cord­ing to a pri­vate sur­vey, which also found busi­ness op­ti­mism at its low­est in 21/2 years. Fri­day’s sur­vey adds to deep­en­ing gloom around busi­nesses and con­sumers, un­der­lin­ing broad­en­ing cracks in econ­omy as growth slipped to sixyear low in the April-June quar­ter. The IHS Markit Ser­vices Pur­chas­ing Man­agers’ In­dex fell to a 19-month low of 48.7 in Septem­ber from 52.4 in Au­gust.

It was sec­ond month this year the in­dex had fallen below 50mark separat­ing growth from con­trac­tion — last one be­ing in June. A man­u­fac­tur­ing sur­vey ear­lier this week showed a cool­ing in ac­tiv­ity. “Bad news of cool­ing man­u­fac­tur­ing sec­tor was com­pounded by an out­right ser­vices down­turn in Septem­ber,” Pollyanna De Lima, prin­ci­pal econ­o­mist at IHS Markit, said. The weak man­u­fac­tur­ing and dis­mal ser­vices sec­tor ac­tiv­ity dragged down the com­pos­ite PMI to just below the 50-mark for first time since Fe­bru­ary 2018.

The out­look held out lit­tle hope for a turn­around any­time soon ei­ther, with an in­dex track­ing over­all de­mand for ser­vices falling to 48.8 in Septem­ber, a 19month low. In­dia’s econ­omy has been hob­bled by a de­mand slump, prompt­ing pol­i­cy­mak­ers to step up fis­cal and mone­tary stim­u­lus to re­vive growth.

De­spite mea­sures, firms do not ap­pear con­vinced ser­vices sec­tor will emerge from slump any­time soon, sur­vey showed. Op­ti­mism about next 12 months was low­est in 2-1/2 years.

de­mand and help boost eco­nomic ac­tiv­ity |

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