Services sector activity fell to four-month low in July on weak demand
Mumbai: Activity in the country’s services sector fell to a four-month low in July due to inflationary pressures and weak demand. The S&P Global India Services Purchasing Managers’ Index (PMI) fell to 55.50 last month from 59.20 in June.
S&P Global India’s survey report for the services sector said the June PMI was at an eleven-month high of 59.20, while the July index fell to its lowest level since March.
However, an index above fifty is said to be an extension of that area. Business activity continued to pick up in July. The report said efforts to offer and sell new services are yielding results.
Due to competitive pressures, high inflation and inclement weather, India’s services sector has seen a sharp decline in demand momentum.
Disruptions in global supplies of oil and food have added to inflationary pressures. In April, India’s inflation reached an eight-year high. Though it fell to 7.01 in July, a weaker rupee made imported goods and services more expensive.
In view of inflation, the Reserve Bank has started the process of increasing the repo rate and in the meeting of RBI’s Monetary Policy Committee (MPC) which started today, the repo rate is expected to increase further.
The sub-index for new business was at a four-month low but outperformed historical benchmarks as domestic demand remained stable. New export orders also fell for the 29th consecutive month.
There was no significant increase in employment in the services sector and employment numbers remained almost the same as in June. The service sector companies have sufficient manpower.