Activity in India’s dominant services industry expanded slowly in August as demand softened, according to a survey.
The IHS Markit Services Purchasing Managers’ Index declined to 52.4 in August from July’s year high of 53.8 which is still above the 50-mark separating growth from contraction and higher than the 51.9 in a Reuters poll of analysts.
The slow pace along with the manufacturing growth at a 15-month low, pushed a composite index down to 52.6 in August from 53.9. Also, India’s economy grew at an annual rate of 5.0% last quarter, its slowest in more than six years
This shows a downfall for this quarter as overall demand in the services industry fell sharply from a near three-year high in July of 53.9 to 51.0 last month, leading firms to increase hiring at a slower rate.
Demand weakened as firms increased their prices at the fastest pace since March 2018.
Overall inflation, which has remained below RBI’s medium-term target of 4% for 12 consecutive months, is not predicted to rise above that goal until early next year.
Muted price pressures and an economic slowdown are expected to prompt further easing by the RBI next month. The central bank has already cut a cumulative 110 basis points this year.
Rising expectations for further monetary policy easing and recent measures announced by the government boosted business expectations a 12-month high, the survey showed.