June services growth hits 17-month low as client interest fades
India's services sector growth slowed significantly in June, hitting a 17-month low as domestic demand weakened. New business expansion also reached its slowest point in over two-and-a-half years, leading to a near standstill in hiring. While expo...
By ET Bureau | Updated:
Reuters
India's June services growth slips to 17-month low as demand, hiring cool, PMI shows
New Delhi: India's services sector expanded at its slowest pace in 17 months in June as challenging market conditions and reduced client interest weighed on sales and output, according to a private survey released Friday. Exports, however, remained a bright spot, with overseas demand rising to a three-month high.
The HSBC India Services PMI Business Activity Index fell to 57.4 in June from 59.8 in May and 60.4 a year earlier. A reading above 50 indicates expansion, while one below 50 signals contraction.
Pranjul Bhandari, chief India economist at HSBC, said the loss of momentum points to more challenging market conditions and weaker demand, particularly at home.
"Even so, external demand held up well as overseas sales stayed robust and growth reached a three-month high," she said.
Manufacturing activity also softened, with the HSBC India Manufacturing PMI easing to a three-month low of 54.2 in June from 55 in May.
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As a result, the HSBC India Composite PMI, which combines manufacturing and services activity, declined to 57.1 in June from 59.3 in May, reflecting slower growth in sales and employment.
Looking ahead, service providers remained optimistic about output growth over the next 12 months, although overall business confidence slipped to a five-month low. Firms cited equipment purchases, marketing initiatives and new client enquiries as reasons for optimism, while competition, difficult economic conditions and rupee depreciation remained key concerns.
New business growth slowed to its weakest pace in more than two-and-a-half years.
