The country's services sector expanded at a slower pace in September as higher fuel costs and stronger US dollar made imported goods expensive, says a survey. The seasonally-adjusted Nikkei India Services Business Activity Index touched 50.9 in September, down from 51.5 recorded in August.

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This is also the lowest reading in the current four-month sequence of rising activity. In PMI parlance, a print above 50 means expansion, while a score below that denotes contraction.

According to the survey report released Thursday, expectations remained in positive territory, whilst firms added to their staffing levels for the 13th successive month as part of efforts to keep on top of workloads.

The service sector continued to expand during September, but at a marginal rate amid reports of underwhelming market demand, the report said. "Price pressures intensified, with higher fuel costs and a stronger US dollar raising the price of imported goods," it added.

Paul Smith, Economics Director at IHS Markit and author of the report, said that growth of India's services economy spluttered during September amid reports of faltering demand for services. "And despite a slight pick-up in manufacturing output growth during the month, overall private sector activity rose at the weakest rate since May," he noted.

IHS Markit complies the survey on a monthly basis. According to the survey, companies reported that market conditions were underwhelming amid a lack of demand at a time of generally higher prices.

Broad sector data showed that underlying growth in activity and new work remained strongest in the information and communication sector. In contrast, there were falls seen in the finance and insurance and business services categories.

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Although manufacturers recorded a slightly stronger increase in employment, the rise was insufficient to prevent a slowdown in overall jobs growth, the report said. Latest data showed the net rise in private sector employment was the slowest in over a year.