HSBC services PMI slips to 46.7 in Dec

Raising doubts about the pace at which the economy will recover from a decade low slowdown, India’s services sector shrank in December again, at a faster pace than the last month, the HSBC’s Purchasing Managers’ Index has shown.

This was the sixth consecutive monthly drop in output levels, which is the longest period of continuous reduction since 2008-2009 global financial crisis, Leif Eskesen, Chief Economist, India & ASEAN, HSBC Global Research said.

New business contracted at the quickest pace since September, with panelists reporting a "fragile economy" and competitive pressures, it said.

The sharpest decline in new orders was noted at hotels and restaurants. Growth was recorded both in business activity and new orders for the post and telecommunication sub-sector.

HSBC said outstanding business of both service providers and manufacturers increased in December, leading to a further accumulation of unfinished work . Private sector employment rose in December and both manufacturers and service providers posted job creation, HSBC said.

If the same trend is seen in retail and headline inflation numbers for December 2013 to be released soon, the RBI may have to pause rates again in January, HSBC said.

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