Services sector shrinks on muted demand
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.
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