Slowest Growth In 6 Months With Services PMI At 54.3 In Sep
This is the longest stretch of expansion ever since October 2016. After firms hiked their prices for a nineteenth month as they witnessed higher energy, food, labour and material costs, the demand slowed.
India’s services industry growth witnessed huge fall in September to a six-month low. The fall was due to substantial easing in demand amid high inflation, according to a private survey.
The S&P Global India services Purchasing Managers’ Index fell to 54.3 in September which was 57.2 in August. This is much lower than poll expectation for a decent drop to 57.0 as per a media agency.
In spite of staying above the 50-mark separating growth from contraction for the continuous fourteenth month, the index fell to its lowest since March. This is the longest stretch of expansion ever since October 2016.
Even though the new business sub-index, a measure of demand, cooled remarkably to its lowest ever since March being above 50 for the fourteenth continuous month.
International demand has not been revived since the beginning of pandemic. It remained sub – 50 amid global worries even though the fall in September was the weakest ever since January this year.
After firms hiked their prices for a nineteenth month as they witnessed higher energy, food, labour and material costs, the demand slowed.
The Reserve Bank of India (RBI) raised interest rates by 190 basis points to sustain inflation and offset some of the effects of aggressive U.S. Federal Reserve hikes since May. As consequence it has weakened many currencies, including the Indian rupee.
As a measure to shore up the rupee by RBI, foreign reserves in India declined by almost 100 billion dollar to 545 billion dollar. They were expected to fall to 523 billion dollar by year-end, as per a media agency poll.
Despite continues hiring in the sector for the fourth month, fewer jobs were created in comparison to August.
The silver lining was the future activity sub-index, which reached peak in almost eight years. The future activity sub-index measures optimism, giving hopes of brighter growth.
After both manufacturing and services sectors cooled on falling demand, the overall S&P Global India Composite PMI Output Index slowed to 55.1 from 58.2 in August.