India’s services sector shrank faster in March compared to the previous month, raising worries about an early revival of the economy battling to claw out of a decade-low slowdown, the results of a latest monthly survey showed.
The HSBC Services Purchasing Managers’ Index (PMI), compiled by Markit, fell for the ninth consecutive month to 47.5 in March from 48.8 in February, indicating faltering business conditions.
PMI is a metric to measure economic activity capturing output to sales. A reading below 50 indicates contraction.
“Following some stabilisation in recent months, service sector activity weakened again in March led by softer domestic demand,” said Leif Eskesen, chief economist for India and ASEAN at HSBC.
“Meanwhile, inflation pressures eased. Looking ahead, growth is expected to remain subdued in coming months, but pick up gradually during the second half of 2014. This, however, assumes that the election outcome provides the elected government with a workable mandate,” he added.
The data for March, however, signalled employment growth in the Indian service sector, but the rate of increase was only slight.
Where job creation was reported, this was attributed to forecasts of higher levels of new work in coming months.
“Payroll numbers in the private sector as a whole rose, although slightly and at a broadly unchanged pace from February,” the survey showed.
Service providers were optimistic in March that activity would rise over the next year.