Growth in services activity in India decelerated in October on a monthly basis owing to competitive pressures and inflationary forces, private survey data showed on Friday.
The S&P Global India Services Purchasing Managers’ Index fell to 58.4 last month from September’s 61.0. A Reuters poll forecast the data point at 60.5. The reading has remained above the 50 mark, which separates growth from contraction, for the 27th consecutive month.
With manufacturing activity expanding at its slowest pace in eight months and services growth also cooling, the overall Composite PMI fell to 58.4 in October from 61.0.
“The Indian service economy continued to register impressive growth, despite the increases in business activity and new work intakes softening from September’s over 13-year highs,” said Pollyanna De Lima, economics associate director at S&P Global.
“Exports was an area of particular strength in October, with new business gains from Asia, Europe and the U.S. boosting growth to its second-highest in the series over a nine-year history.”
The rate of new business received by companies was at the weakest level since May, yet grew for the 27th consecutive month.
The survey highlighted “fierce competition and subdued demand for certain types of services,” to negatively affect the business’s prospects for the next year, as reflected by a drop in the future activity sub-index from its nine-year high in September to 63.5. Additionally, employment growth decreased to its lowest level in three months.
“Although survey participants passed these additional cost burdens on to clients, permitted by demand strength, the rise in charges could have been the trigger of the deceleration in sales growth,” added De Lima.
“Moreover, a pick-up in inflation expectations in October dampened business confidence.”