Indian services growth slows for third straight month in June- PMI
The central bank is expected to cut rates one more time before Governor Raghuram Rajan`s term ends in September.
Growth in India`s services sector slowed to a seven-month low in June as new orders continued to soften, a business survey showed on Tuesday.
Though input prices rose, service firms were barely able to raise selling prices, suggesting the central bank may have room to cut interest rates again in coming months if inflationary pressures in the broader economy moderate.
The Nikkei/Market Services Purchasing Managers` Index fell to 50.3 in June from May`s 51.0, its 12th month above the 50 mark that separates growth from contraction.
The new business sub-index, an indicator of domestic and foreign demand, cooled to a 11-month low of 50.5 in June from May`s 50.9.
"The Indian service sector saw a further cooling of growth momentum in June, the third in consecutive months, with a weaker rise in new business leading to a softer expansion in activity," said Pollyanna De Lima, economist at Markit.
The slowdown came despite firms increasing prices at a slower pace last month, suggesting that retail inflation could remain subdued in coming months.
Consumer inflation, at 5.76% in May, is slightly above the Reserve Bank of India`s near-term target of 5%, driven by higher food costs.
But the RBI, which has kept its benchmark rate unchanged at a five-year low of 6.50% since April, signalled at its June meeting that there was room for a cut if good monsoon rains ease upward pressure on food prices.
The central bank is expected to cut rates one more time before Governor Raghuram Rajan`s term ends in September.
A sister survey on Friday showed factory growth edged up to a three-month high, driven by stronger demand. The composite manufacturing and service index edged up to 51.1 from 50.9 in May.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.
RECOMMENDED STORIES
Power of Compounding: How many years will it take to reach Rs 3 crore corpus if your monthly SIP is Rs 4,000, Rs 5,000, or Rs 6,000
Power of Compounding: Salary Rs 25,000 per month; is it possible to create over Rs 2.60 crore corpus; understand it through calculations
Reduce Home Loan EMI vs Reduce Tenure: Rs 75 lakh, 25-year loan; which option can save Rs 25 lakh and 64 months and how? Know here
Top 7 Large and Mid Cap Mutual Funds with Best SIP Returns in 5 Years: No. 1 fund has turned Rs 15,000 monthly SIP investment into Rs 20,54,384; know about others
New Year Pick by Anil Singhvi: This smallcap stock can offer up to 75% return in long term - Check targets
PSU Oil Stocks: Here's what brokerage suggests on these 2 largecap, 1 midcap scrips - Buy, Sell or Hold?
11:02 AM IST