"Services Growth Slips In April, Raises Rate Cut Hopes"

NEW DELHI: Services sector growth eased for the second straight month amid weaker demand conditions during April and moderate inflation provides the RBI with more scope for further rate cuts, said a survey.

The contraction in services sector activity for the second month running, also resulted in some job losses and companies adopted a cost-cautious approach towards hiring, HSBC survey said.

The HSBC India Services Business Activity Index, which tracks changes in activity at the service companies, fell to a three-month low of 52.4 in April from 53.0 recored in March.

A score above 50 indicates that the sector is expanding, while a figure below that level means
contraction.

"The slowdown in the Indian service sector continued in April with weaker activity growth reflecting softer demand conditions," Markit Economist Pollyanna De Lima said.

Meanwhile, April data highlighted falling payroll numbers in the Indian services sector. However, the rate of job cuts was only fractional.

"Accompanying the subdued outlook in the opening month of the fiscal year, was a return to job shedding as companies maintained a cost-cautious approach," Lima added.

On the positive side, the confidence among services companies regarding the one-year outlook for activity improved, indicating that firms are optimistic that the current deceleration in growth is a temporary soft patch.
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