NEW DELHI, July 3: Services sector contracted for the second consecutive month in June as new orders declined for the first time in 14 months, an HSBC survey said today.
The contraction, coupled with decline in manufacturing growth rate, may add to the clamour for further rate cuts by RBI.
The HSBC India Services Business Activity Index, which tracks changes in activity at service companies, fell to 47.7 in June, down from 49.6 in May — its lowest level since March 2014.
The index went below the crucial 50 mark, which separates growth from contraction, for the second straight month.
“June’s Indian service sector data disappointed, with reductions in both activity and new business accelerating since May,” Pollyanna De Lima, economist at Markit, which compiles the data, said.
Underlying the drop in services activity was a further contraction in new business as respondents said competitive pressures and extreme heat took a toll on the services sector.
“The heatwave and competitive pressures were again reported to have weighed on service providers’ performance. However, companies are hopeful of turning the corner in coming months, with confidence regarding the 12-month outlook remaining strong,” Lima added.
Meanwhile, service providers raised employment further in June. The rate of job creation was, however, only marginal and slower than the long-run series average. (PTI)
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