Private sector output in India falls in March: HSBC

Tags: HSBC, Economy
Private sector output in India fell in March, after a fractional increase in the previous month amid moderation in domestic demand conditions, an HSBC survey said today.

The HSBC India Composite Output Index, which maps both services and manufacturing, declined from 50.3 in February to 48.9 in March, as manufacturing production growth eased and service sector activity fell at faster rate during the month.

Meanwhile, the HSBC services business activity index fell from 48.8 in February to 47.5 in March, remaining below the 50 level mark for the ninth successive month.

A PMI reading above 50 indicates growth while a lower reading means contraction.

The contraction in the services sector activity was largely on the back of softer domestic demand. New business received by Indian services companies decreased for the ninth month running in March.

According to the HSBC survey, the weaker client demand, that led to the latest drop in new work intakes, can be partly linked to the forthcoming elections.

"Following some stabilisation in recent months, service sector activity weakened again in March led by softer domestic demand," HSBC Chief Economist for India & ASEAN, Leif Eskesen said.

However, Indian service providers were optimistic that activity would rise over the next 12 months as growth of new business, supported by improved economic conditions and new marketing initiatives, is expected to drive the expansion.

On price rise, the report said inflationary pressures in the Indian private sector softened during March, with both input costs and output prices rising at weaker rates.

Looking ahead, growth is expected to remain subdued in coming months, but pick up gradually during the second half of 2014, Eskesen said adding "this, however, assumes that the election outcome provides the elected government with a workable mandate".

India's economic growth slowed to 4.5 per cent in 2012-13 due to the global slowdown and domestic factors such as high interest rates.

The growth rate during April-September of 2013-14 slipped to 4.6 per cent from 5.3 per cent in the same period in the previous financial year.

EDITORIAL OF THE DAY

  • Finance minister has been pragmatic in exempting FIIs from MAT claims

    Good sense has finally prevailed in the government, with finance minister Arun Jaitley announcing the income-tax officials will exempt overseas funds

FC NEWSLETTER

Stay informed on our latest news!

INTERVIEWS

Sarthak Raychaudhuri

vice-president, HR, Asia South Whirlpool of India

GV Nageswara Rao

MD & CEO, IDBI Federal Life

Timothy Moe

Goldman Sachs

TODAY'S COLUMNS

Amita Sharma

Centre set to scrap 60:40 norm for NITs

A committee set up by the ministry of human resource ...

Zehra Naqvi

If you bend, you won’t break

There’s an ancient exercise about a green, supple new branch ...

Gautam Gupta

Bring on the Benares brigade

It was in 2003 when I first started work and ...

INTERVIEWS

William D. Green

Chairman & CEO, Accenture