BENGALURU (Reuters) - India’s pivotal services industry lost some momentum in September as demand weakened despite firms cutting prices for the first time this year, a business survey showed on Tuesday.
The Nikkei/Markit Services Purchasing Managers’ Index eased to 51.3 in September from August’s 51.8 but marked its third straight month above the 50-level that separates growth from contraction.
The prices charged sub-index slumped to a near 5-year low of 49.5 from 51.0 in August as falling commodity prices helped weaken input cost pressures.
Retail inflation cooled to a new low of 3.66 percent in August, prompting the Reserve Bank of India to cut its benchmark repo rate for the fourth time this year. It brought rates down to a 4-1/2 year low of 6.75 percent in September to spur demand and boost economic growth.
“The sluggish increase in private sector output mirrored softer demand conditions across the country, while growth of global demand for Indian goods also moderated,” said Pollyanna De Lima, economist at Markit.
“Looking ahead, service providers expect further setbacks, as highlighted by the Future Output Index sliding to its lowest mark in the history of the series.”
The government predicts growth of around 8 percent this fiscal year yet the central bank downgraded its growth estimates to 7.4 percent from 7.6 percent last week.
A sister survey last week showed India’s manufacturing activity also slowed more than expected to a seven-month low.
Reporting by Anu Bararia; Editing by Richard Borsuk