India Services Sector PMI Drops To 50 In October: HSBC
After HSBC’s announcement of a moderate growth in India’s manufacturing sector yesterday (November 4), HSBC came out with India Service PMI Business Activity Index. This Service PMI tracks changes in activity in India services companies on a monthly basis. This Service PMI reading fell to 50 in October from 51.6 in September.
The reading above 50 signifies the expansion in business activities across the service sector and below 50 signifies the contraction of the sector. The latest reading indicates stagnation in business activities after five successive months of growth. The growth in some sub-sectors offset by the contraction in other sub-sectors with telecommunication being the best-performing and hospitality being the worst-performing.
Further, HSBC India Composite PMI Output Index – that measures combined business activity across both manufacturing and services – also fell to 51.0 in October from 51.8 in September. The fall in private sector output was due to contraction in services sector business activity despite of expansion in manufacturing activity. The service sector growth was slowest during October month since May this year. The employment across the sector too showed a muted growth or stagnancy during the month.
Interestingly, the HSBC’s survey exhibited that the Indian service sector firms remained highly optimistic about the prospects of business growth in coming years. The business sentiment was the strongest in three months according to the survey.
Commenting on the India Services PMI, Frederic Neumann, Co-Head of Asian Economic Research at HSBC said. “Service sector activity was unchanged in October since growth in some sectors was offset by contraction in others, such as in the hospitality sector. On the positive side, business confidence rose to the strongest in three months, with the hospitality sector being most upbeat about the outlook. The revival of reforms post recent state elections, if sustained, should lift growth on a broad basis."