Services sector activity in India stagnated during October amid weaker growth of new business orders, an HSBC survey said today.
The HSBC India Services Business Activity Index, that tracks changes in activity at Indian services companies on a month-by-month basis, fell from 51.6 to exactly 50.0 in October.
A figure above 50 indicates the sector is expanding, while a figure below that level means contraction.
The stagnation in services sector activity follows five successive months of growth amid fall in new business orders, the report said.
“Services sector activity was unchanged in October since growth in some sectors was offset by contraction in others such as in the hospitality sector,” HSBC Co-Head of Asian Economic Research Frederic Neumann said.
Meanwhile, the headline HSBC Composite Output Index — that maps the manufacturing as well as the services sector output — stood at 51, down from 51.8 in September, indicating that growth of private sector output in India eased to the weakest in five months.
However, services sector firms in India remained highly optimistic regarding prospects for activity growth in the coming year.
Business sentiment was the strongest in three months, with panelists commenting on anticipated improvements in demand and new marketing initiatives as key sources of optimism, the report said.
“On the positive side, business confidence rose to the strongest in three months, with the hospitality sector being the most upbeat about the outlook,” Neumann said.
Neumann added: “the revival of reforms post recent state elections, if sustained, should lift growth on a broad basis.”