The services sector expanded at its slowest pace in 13 months in November, suggesting that the economy had not improved much from the 13 quarter low GDP growth in July-September quarter.
Services sector, which has an over 60% weight in India’s gross domestic product, expanded a robust 7.2% in July-September, but the latest numbers indicate that the industrial slowdown is beginning to drag down the sector growth.
The HSBC services Purchasing Managers' Index dropped to 52.1 in November from 53.8 in October. A reading of over 30 on this index based on a survey of about 400 companies indicates expansion below that contraction.
However, the business expectations sub-index provided some hope for the future, rising to 72.2 in November from 68.3 in October.
The manufacturing PMI released earlier showed sector expanded at its fastest pace in five months, which should have knock on impact on services in the coming months.
The services PMI also showed pressure on prices, indicating that inflation may not soften soon. The Reserve Bank of India will review its monetary policy on December 18, but in recent days hopes of a rate cut have receded amidst indication that inflation has not moderated and economy avoided the sharp decline in growth some experts had anticipated in the second quarter of the current fiscal.
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