HSBC India Services Purchasing Manager Index Contracted For Seven Month In A Row

India's services sector contracted for a seven month in a row, one of the longest consecutive contractions in services sector since financial crisis of 2008-09. Only solace was that we can find is that rate of contraction was slowest in last seven months, an HSBC survey said today.

The HSBC India Services Purchasing Managers' Index (PMI) - a measure of activity in the services sector increased from 48.1 for the month of December 2013 to 49.6 in January 2014. Any figure below 50 indicates contraction while above that means expansion. 

The reasons cited for contraction is tough economic conditions and lower new orders. Slowdown in economy has led to higher competition for new order and weaker underlying demand. Post and Telecommunication was the best performing category among services sector. Financial Intermediation, however, suffered the sharpest downfall in both business activity and new orders. 

Nonetheless, there are some positive signals too emanating from the survey. Despite the contraction, more jobs were created and workers were hired on expectation of growth in the new orders in coming month. According the survey, "service providers were optimistic in January that business activity would expand over the next year. Growth is expected to be supported by planned increases in marketing, forecasts of an overall improvement in the Indian economy and stronger demand. Moreover, the degree of positive sentiment was the highest in six months."