Business activity in India's services sector, which accounts for half of the country's GDhttp://www.indiainfoline.com/Markets/News/Euro-zone-composite-PMI-softens-in-August/4923284289P, slowed for the second consecutive month in August after hitting a two-year peak in June but purchasing managers surveyed are optimistic about the outlook.
The HSBC Markit Business Activity Index fell to 59.3 in August from 61.7 in July. But, the index stayed well above the 50 mark that separates growth from contraction. The August data represents the 16th straight month of expansion for the services gauge.
Although all service sector sub-indexes stayed in the expansionary territory, half of them fell marginally compared with the previous month.
"Service sector activity, which in India accounts for the bulk of economic output, slowed a little last month," Frederic Neuman, co-head of Asian Economics Research at HSBC, said in the report.
"Meanwhile, the rise in business expectations suggests that activity could re-accelerate in the coming months," he said.
Business expectations rose to 72.3 in August from 67.8 in July, with almost half of the panelists saying they expect business activity to rise in the coming months.
The input price index fell after having risen in the previous month.
"Monetary officials can hardly afford to relax their guard. Growth remains strong, and there are few signs that input and output price pressures are letting up meaningfully," Neumann said.
A separate survey released on Wednesday showed that India's manufacturing sector expanded for the 17th successive month in August, although at a slightly slower pace than in July.
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