India's services industry barely expanded in November, growing at its weakest pace in five months, as firms grew increasingly gloomy about the coming year, a business survey showed on Thursday.
The Nikkei/Markit Services Purchasing Managers' Index fell sharply to 50.1 in November from October's eight-month high of 53.2.
A reading above 50.0 indicates growth For the first time in the 10-year history of the survey, the business expectations sub-index tipped below 50, falling to 49.9 from 53.7 and highlighting firms' pessimism regarding prospects.
"Gloomy PMI data show a broad-based weakness in output, with little prospect of a rebound apparent in the near term," said Pollyanna De Lima, economist at Markit.
"Firms were concerned about stuttering demand and tough economic conditions."
The downbeat outlook came despite Asia's third-largest economy expanding 7.4 per cent annually in the July-September quarter - outpacing China. Robust growth in manufacturing, which accounts for roughly one-fifth of GDP, drove part of the surge although some analysts feared public spending contributed more than private consumption.
The Reserva Bank of India, having already cut 125 basis points from interest rates this year, left policy unchanged on Tuesday and said any further easing from the current 6.75 per cent would depend on inflation.
However, scope for further easing may be limited after inflation climbed to 5 per cent in October, meeting the level the central bank wants it at by March 2017.
Markit's survey also found firms' input costs increased while the prices they charged consumers were unchanged in November, after falling the previous two months.
Adding to concerns, activity in the manufacturing sector slowed to a 25-month low in November, according to a sister survey released this week.
Photograph: Reuters
