India's service activity slows in September as PMI falls to 52

New Delhi: India's service activity lost steam in September after touching a three year high last month, a private survey showed on Wednesday.

The Nikkei India Services Business Activity Index dropped to 52 in September after peaking at 54.7 in August and "pointed to a slower rate of expansion that was moderate overall".

A reading above 50 on the index indicates economic expansion while a figure below that indicates contraction.

Data released by the same agency on Monday showed that India's manufacturing lost momentum in September after growing at its fastest pace in thirteen months in August, a private survey showed on Monday.

Put together, the seasonally adjusted Nikkei India Composite PMI Output Index fell from August’s 42-month high of 54.6 to 52.4 in September.

"Over Q2 FY2016/17, however, the PMI Composite Output Index posted its highest reading since the Jan-Mar 2015 quarter, thereby suggesting a pick-up in GDP growth," said Pollyanna De Lima, Economist at Markit and author of the report.

Business optimism among Indian service providers fell in September, with the degree of confidence remaining below its long-run average. Challenging market conditions was frequently reported by panellists as a key factor weighing on sentiment.