India's private sector activity expanded for fourth successive monthly as the HSBC Composite Output Index stood at 51.6 in August, down from 53 in July.
While the latest figure indicated a slowdown in output growth across the private sector, it remained consistent with a moderate expansion in activity. Output growth weakened from July at both services and manufacturing companies, although manufacturing production increased at the second-quickest pace since February 2013.
The HSBC India Services Business Activity Index came at 50.6 in August, down from 52.2 in July. The latest reading highlighted a fourth consecutive monthly expansion in service sector output, and was consistent with a modest rate of growth.
Sector data indicated that growth of activity was broad-based, as only hotels & restaurants companies reported a reduction. The fastest increase was at post & telecommunications firms.
Indian services firms registered a fourth successive monthly rise in new orders in August, although the pace of expansion slowed from July. Panel members attributed improvements in new business to stronger demand. Incoming new work rose solidly across the private sector as a whole, with the sharper expansion recorded in the manufacturing industry.
Input prices faced by Indian service sector firms increased in August, although the rate of cost inflation eased to the weakest since July 2013. Survey respondents suggested that higher input costs centred on rising oil prices. Private sector companies across the economy as a whole noted a slowdown in cost pressures from the previous month.
Frederic Neumann, co-head of Asian Economic Research at HSBC said, "Growth in service sector activity slowed in August. Moreover, the improvement in new business flows and business optimism moderated. Services activity is once again turning down following a swift post-election uptick, suggesting that an improvement in reform momentum is needed to lift sentiment in the sector. On the positive side, weaker activity has softened inflation indicators within the survey."
