Private sector output growth lowest in 17 years: HSBC
03 Apr 2013
India's private sector output in March witnessed the slowest rate of expansion in 17 months owing to a significant decline in new business orders, an HSBC survey released today said.
The HSBC India Composite Output Index, which maps both manufacturing and services, fell to 51.4 in March from 54.8 in February, indicating business activity increased slightly, but at the slowest pace since October 2011.
Output growth eased across both the manufacturing and service sectors but the index remained above the 50-mark, below which it indicates contraction.
Meanwhile, the headline HSBC Services Business Activity Index registered 51.4 in March, down from 54.2 in February.
''Growth in service sector activity slowed notably due to a deceleration in new business flows,'' HSBC chief economist for India & ASEAN Leif Eskesen said, adding that work and hiring rose at a slower pace.
Earlier data showed that India's manufacturing sector also witnessed the slowest rate of expansion in 16 months in March as power outages hampered production activity along with a decline in new business orders.
Service sector firms as well as manufacturers added to their staff numbers during March, but the rate of job creation was ''moderate''.
After registering a 12-month high in January, the country's services sector has reported weak output in the last two months. However, service providers remain optimistic about the future.
The degree of confidence among service providers was the strongest registered since December 2012 and service sector firms linked positive sentiment to expectations of stronger demand and planned investment in marketing, HSBC said.
On inflation, the report said input prices in the Indian service sector rose but moderately during March and subsequently, services companies increased their selling prices.
''Encouragingly, input prices and prices charged inflated less fast. Despite this the scope for further rate cuts is limited, and the next cut may well be the last,'' Eskesen said.
The Reserve Bank of India in its mid-quarter monetary policy review on March 18 reduced the indicative policy rate (repo rate) by 25 basis points from 7.75 to 7.50 per cent.
India's GDP growth in the third quarter of 2012-13 stood at 4.5 per cent, the weakest in the last 15 quarters.
