Activity in India‘s dominant services industry has been expanded at a slower pace in August as demand has softened as per a business survey although business optimism has hit a one-year high.
The IHS Markit Services Purchasing Managers’ Index has declined to 52.4 in August from July’s year high of 53.8, still comfortably above the 50-mark separating growth from contraction and higher than the 51.9 in a Reuters poll of analysts.
Pollyanna De Lima, principal economist at IHS Markit has said that the weaker PMI readings for India‘s service sector match the trend noted in the manufacturing industry, bringing unwelcome news of a cooling economy halfway through the second quarter of fiscal year 2019/20.
India‘s economy has grown at an annual rate of 5.0% in last quarter, its slowest in more than six years and significantly lower than 5.7% predicted in a Reuters poll.
Rising expectations for further monetary policy has been easing and recent measures have been announced by the government has boosted business expectations a 12-month high, the survey showed.
De Lima has added that both manufacturers and service providers believe that supportive public policies can help shift growth momentum into a higher gear in the coming 12 months.