India's services sector hits a low

The HSBC Markit Business Activity Index , based on a survey of around 400 companies, slumped to 53.8 in August from 58.2 in July, the index's biggest one-month decline since January 2009.

It was also the weakest growth since June 2009, but the index has stayed above the 50 mark that separates growth from contraction for 28 consecutive months.

The new business sub-index fell to its lowest level in three months in August, 54.9 from July's 59.3, as dampening global economic conditions knocked orders. Expectations for new business were also scaled back in August, suggesting the headline PMI will slow further in September.

The services sector, which includes outsourcing power-houses like Tata Consultancy Services and Infosys, has traditionally shrugged off weak global economic conditions due to its ability to take on more work at a time when companies worldwide seek to lower costs.

The Indian survey also showed a reduction in service sector employment levels for the second consecutive month as new business growth slowed while input costs and output prices continued to march ahead. India’s economy grew at its weakest pace in six quarters in the three months through June, even though the official data was marginally above economists’ predictions.