India's services sector, the backbone of the country's economy grew at a marginally slower pace in June, even as a significant rise in new orders may sustain activity in the coming months, according to a HSBC survey.
"While service sector activity grew at a slightly slower pace, new orders grew faster and this should hold up activity in coming months," HSBC chief economist for India and ASEAN Leif Eskesen said in a statement.
The service providers also increased their staffing levels in June for the fourth month in a row and this in turn helped in the reduction of work backlog significantly.
While HSBC services purchasing managers index (PMI) fell to 54.3 in June from 54.7 in May, the globally well-known benchmark remained above the crucial 50 mark marking growth since November - eighth month in a row.
The composite PMI for both manufacturing and services sectors has shown a slight improvement at 55.7 in June against 55.3 in May - registering the fastest expansion of output in 4 months.
But with inflation staying high at 7.6% in May and the composite PMI numbers showing improvement, it is hard to build a strong case for the policy interest rate cuts in the near term, the survey pointed out.
The manufacturing sector expanded at the fastest pace in four months in June as the country saw improvement in business conditions as well as hiring.