Services sector grows but sentiments down in sept.

In September, India’s services sector, which accounts for the largest chunk of the country’s economy, grew more than in the previous month, owing to higher new orders, showed the HSBC purchasing Manager Index (PMI). However, the sentiments in the sector fell to the lowest in a year, following the surge seen after the Lok Sabha elections.

The PMI for September stood at 51.6 points, against 50.6 in August. A reading of more than 50 shows expansion, while one below 50 indicates contraction. The PMI for services based on a survey of about 350 private companies.

For June, a month after a new government came to power at the centre, the reading was 54.4 points. The reading for July was 52.2

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Frederic Neumann, co head (Asian economic research), HSBC, said “Service sector activity bottomed out in September, thanks to stronger new business flows. However business sentiment continues to deteriorate, after a strong post election uptick. A pick up in reform efforts is needed to put growth on a firmer footing.”

With manufacturing PMI at 51 points in September, the HSBC composite output index stood at 51.8 points compared with 51.6 in August.

In September, services activity rose in three of the six sub-sectors monitored, with the highest rise seen in post & telecommunications.

Amid report of stronger demand, growth in new business at services firms continued for the fifth consecutive month. The sector also recorded job creation, the first time in three months.

Following six consecutive months of backlog accumulation, business outstanding was stable. Expectations on the output front were high. Those surveyed were optimistic about an improvement in demand and new marketing initiatives.