India’s service sector activity declined for the second straight month in October, the first back-to-back reduction since the second quarter of 2017-18, dragging business confidence to its lowest level in close to three years, a private survey showed.
Although the IHS Markit Services Purchasing Managers' Index rose to 49.2 last month from 48.7 in September, it remained below the 50-mark threshold that separates contraction from expansion.
“The degree of optimism observed in October was among the weakest seen in the near 14-year survey history,” IHS Markit said in the report.
A number of panellists were concerned about the possibility that challenging economic conditions will persist.
“It's somewhat worrying to see the Indian service sector stuck in contraction, as firms react to muted demand by lowering business activity,” said Pollyanna de Lima, Principal Economist at IHS Markit.
“Perhaps even more concerning was the downward revision to future expectations, given the possible detrimental impact of subdued business confidence on investment and jobs. The latter already displayed its joint-weakest expansion in over two years,” de Lima added.
As per the survey report, service sector employment increased for the twenty-sixth month in a row, albeit at the joint-slowest pace over this period.
“While a few firms took on extra staff, this was curbed by job shedding at other companies,” it said.
A sister survey last week showed manufacturing activity in India slipping to a two-year low in October.
Put together, Indian private sector activity decreased for the second straight month in October, reflecting a notable slowdown in growth of factory production and a further contraction in services activity. The Composite PMI Output Index fell from 49.8 in September to 49.6, signalling a marginal rate of reduction overall, the report showed.