HYDERABAD: Services sector contracted for the second consecutive month in June for the first time in 14 months, said HSBC.
The HSBC India Services Business Activity Index, which tracks changes in activity at service companies, fell to 47.7 in June, down from 49.6 in May — its lowest level since March, 2014.
The index went below the crucial 50 mark, which separates growth from contraction, for the second straight month.
The contraction, coupled with decline in manufacturing growth and dip in new orders, may add to the clamour for further rate cuts by RBI.
“June’s Indian services sector data disappointed, with reductions in both activity and new business accelerating since May,” said Pollyanna De Lima, Economist at Markit, which compiles the data.
“The heatwave and competitive pressures were again reported to have weighed on service providers’ performance. However, companies are hopeful of turning the corner in coming months, with confidence regarding the 12-month outlook remaining strong,” Lima said.
Meanwhile, service providers raised employment further in June. However, the rate of job creation was only marginal and slower than the long-run series average.
Meanwhile, the Nikkei India Composite PMI Output Index, which maps both the manufacturing and services sectors, fell to 49.2 in June from 51.2 in May, below the crucial 50-level for the first time since April, 2014.