<p>Services sector growth lost momentum for the second straight month in April on weaker domestic demand, raising hopes for an imminent rate cut by RBI, an HSBC survey said today. </p>.<p>The manufacturing sector also saw its growth rate coming down in the last month, as per another HSBC survey released earlier this week, which coupled with a moderate inflation may convince the Reserve Bank to cut its policy rate for the third time this year.<br /><br />RBI will hold its next monetary policy review on June 2, although the earlier two rate cuts -- first in January and then in March -- were effected outside the scheduled meetings. HSBC's monthly services sector survey also showed that the contraction in its growth rate led to some job losses and the companies adopting a cost-cautious approach towards hiring.<br /><br />The HSBC India Services Business Activity Index, which tracks changes in activity at the service companies, fell to a three-month low of 52.4 in April from 53.0 recored in March.<br /><br />A score above 50 indicates that the sector is expanding, while a figure below that level means contraction.<br /><br />"The slowdown in the Indian service sector continued in April with weaker activity growth reflecting softer demand conditions," Markit Economist Pollyanna De Lima said.<br /><br />Meanwhile, April data highlighted falling payroll numbers in the Indian services sector. However, the rate of job cuts was only fractional.<br /><br />"Accompanying the subdued outlook in the opening month of the fiscal year, was a return to job shedding as companies maintained a cost-cautious approach," Lima added.<br /><br />On the positive side, the confidence among services companies regarding the one-year outlook for activity improved, indicating that firms are optimistic that the current deceleration in growth is a temporary soft patch.<br /><br />The slower rise in service sector activity was matched by a softer increase in manufacturing production. As a result, the headline HSBC India Composite PMI Output Index fell from 53.2 in March to a six-month low of 52.5 in April, HSBC said.<br /><br />On prices, HSBC said that in line with rising raw material costs, average input prices in the Indian service economy increased further in April. Nonetheless, the rate of inflation was moderate.<br /><br />"Inflation rates for both input and output prices were weak by historical standards, providing the RBI with more scope for further rate cuts," Lima said.<br /><br />Lima further added that an expansionary approach to monetary policy would, at a time when the economy is losing traction, provides much needed support for further growth.</p>
<p>Services sector growth lost momentum for the second straight month in April on weaker domestic demand, raising hopes for an imminent rate cut by RBI, an HSBC survey said today. </p>.<p>The manufacturing sector also saw its growth rate coming down in the last month, as per another HSBC survey released earlier this week, which coupled with a moderate inflation may convince the Reserve Bank to cut its policy rate for the third time this year.<br /><br />RBI will hold its next monetary policy review on June 2, although the earlier two rate cuts -- first in January and then in March -- were effected outside the scheduled meetings. HSBC's monthly services sector survey also showed that the contraction in its growth rate led to some job losses and the companies adopting a cost-cautious approach towards hiring.<br /><br />The HSBC India Services Business Activity Index, which tracks changes in activity at the service companies, fell to a three-month low of 52.4 in April from 53.0 recored in March.<br /><br />A score above 50 indicates that the sector is expanding, while a figure below that level means contraction.<br /><br />"The slowdown in the Indian service sector continued in April with weaker activity growth reflecting softer demand conditions," Markit Economist Pollyanna De Lima said.<br /><br />Meanwhile, April data highlighted falling payroll numbers in the Indian services sector. However, the rate of job cuts was only fractional.<br /><br />"Accompanying the subdued outlook in the opening month of the fiscal year, was a return to job shedding as companies maintained a cost-cautious approach," Lima added.<br /><br />On the positive side, the confidence among services companies regarding the one-year outlook for activity improved, indicating that firms are optimistic that the current deceleration in growth is a temporary soft patch.<br /><br />The slower rise in service sector activity was matched by a softer increase in manufacturing production. As a result, the headline HSBC India Composite PMI Output Index fell from 53.2 in March to a six-month low of 52.5 in April, HSBC said.<br /><br />On prices, HSBC said that in line with rising raw material costs, average input prices in the Indian service economy increased further in April. Nonetheless, the rate of inflation was moderate.<br /><br />"Inflation rates for both input and output prices were weak by historical standards, providing the RBI with more scope for further rate cuts," Lima said.<br /><br />Lima further added that an expansionary approach to monetary policy would, at a time when the economy is losing traction, provides much needed support for further growth.</p>