October services growth in India fell to a 7-month low as demand declined

 October services growth in India fell to a 7-month low as demand declined

When combined with the industrial sector's cooling last month, the outcome might still be problematic for India's economic growth prospects, which are projected by a recent Reuters poll to be the quickest among major nations at 6.3% this fiscal year.

According to a poll released on Friday, while employment growth in India's leading services sector slowed down in October for the first time in seven months due to a minor slowdown in demand, overall activity was strong and exports increased steadily.

When combined with the industrial sector's cooling last month, the outcome might still be problematic for India's economic growth prospects, which are projected by a recent Reuters poll to be the quickest among major nations at 6.3% this fiscal year.

The S&P Global India Services Purchasing Managers' Index dropped from September's 61.0 to 58.4 last month, below the 60.5 predicted by Reuters pollsters.

For the 27th straight month, the figure was still over the 50-point threshold that divides expansion from contraction.

According to Pollyanna De Lima, an associate director at S&P Global for economics, "the Indian service economy maintained to register impressive growth, despite an upsurge in business activity and new work intakes moderating from September's over 13-year highs."

October was a particularly strong month for exports, with fresh business opportunities from Asia, Europe, and the United States propelling growth to the second-highest level in the series over a nine-year span."

A crucial indicator of demand, new business, grew at the weakest rate in five months, while exports rebounded last month from a record high in August.

The business's outlook for the next year looked to be dimmed by the survey's observation of "fierce competition and subdued requirements for certain types of services," as seen by the future activity sub-index dropping to 63.5 from a nine-year high in September. The rate of job creation decreased to a three-month low.

Nevertheless, due of soaring expenses for personnel, food, and petrol, businesses continued to pass on higher input costs to their consumers, resulting in a quicker increase in both input prices and prices charged than the previous month.

"Although survey participants communicated these additional cost responsibilities on to clients, permitted by demand endurance, the rise in charges could have served as the trigger of the deceleration in sales development," De Lima said.

"Moreover, a pick-up in inflation projections in October undermined business confidence."

Retail inflation in the South Asian country, which dropped to a three-month low of 5.02% in September, may be exposed to upside risks as a result.

October's Composite PMI dropped from 61.0 to 58.4, with services growth also slowing and manufacturing activity growing at its worst rate in eight months.