India Services Activity Falls to 2009 Low Questions Strength of Economic Fundamentals

Indian services activity shrank in August at its quickest pace since the depths of the global financial crisis as new business dried up, a survey showed, the latest evidence that Asia’s third-largest economy is rapidly losing steam even as policymakers battle a full-blown currency crisis.

Taken together with a survey of Indian factories published on Monday that showed activity shrank for the first time since early 2009, the data will stoke worries that growth in the July-September quarter could be even weaker than in April-June.

The HSBC Services Purchasing Managers’ Index (PMI) compiled by Markit, slipped to 47.6 in August, the weakest since April 2009, from 47.9 in July.

A number below 50 denotes contraction.

“The numbers we have seen so far for July and August for both the manufacturing and service sectors point to a further slowdown in GDP growth during the third quarter,” said Leif Eskesen, chief economist for India at survey sponsor HSBC.

The economy grew 4.4 percent in April-June, its slowest quarterly growth rate since early 2009, as mining and manufacturing contracted, data showed on Friday.

India’s economic growth has almost halved in the past two years.

via Reuters

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