India's services sector has seen contraction over the last seven months. As today's chart shows, the HSBC Purchasing Managers Index (PMI) for services sector has been below 50 over the last 7 months. Though it witnessed a slight recovery in the month of January this year and stood at 48.3, it was still below the benchmark figure of 50. It may be noted that any reading below 50 is a sign of contraction.
Service sector: Going through its ups and downs
Slowdown in retail & wholesale trade, telecommjunications and real estate sector was the primary reason for contraction in the index. Further, increased competition and weak confidence added to the woes. The index movement is based on the general economic environment and hiring activity in the services sector. The hiring activity, in turn, will increase if businesses expect new orders. If new orders fail to materialize the index is likely to remain below the critical 50 level mark in the near future as well.
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Slowdown in retail & wholesale trade, telecommjunications and real estate sector was the primary reason for contraction in the index. Further, increased competition and weak confidence added to the woes. The index movement is based on the general economic environment and hiring activity in the services sector. The hiring activity, in turn, will increase if businesses expect new orders. If new orders fail to materialize the index is likely to remain below the critical 50 level mark in the near future as well.
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