New Delhi, Oct 7 (KNN) Private sector activity in India has inched up fractionally in September amid worrying business sentiments, a HSBC survey said today as the headline HSBC Composite Output Index stood at 51.8, up fractionally from 51.6 in August. 

Meanwhile, the HSBC India Services Business Activity Index, that tracks changes in activity at Indian services companies on a month-by-month basis, rose from 50.6 to 51.6. 

"Services sector activity bottomed out in September thanks to stronger new business flows. However, business sentiment continues to deteriorate after a strong post - election uptick," HSBC Co-Head of Asian Economic Research Frederic Neumann said. 

"A pick up in reform effort is sorely needed to put growth on a firmer footing and address supply side risks to inflation," Neumann added. 

September data indicated growth of Indian private sector activity for the fifth consecutive month as the HSBC Composite Output Index posted 51.8, up fractionally from 51.6 in August. The latest reading was consistent with a moderate expansion in private sector output. Indian manufacturers signalled a slowdown in output growth, in contrast to the accelerated expansion in activity recorded at services companies, HSBC said in a press release.

Though the September data indicated growth of Indian private sector activity for the fifth consecutive month, the pace of increase was marginal. A figure above 50 indicates the sector is expanding, while a figure below that level means contraction. 

Amid reports of stronger demand, there was signal of growth of new business orders at Indian services firms for the fifth month running in September. 

Job creation in the Indian service sector was seen for the first time in three months in September. 

Meanwhile, service sector inflationary pressures from inputs eased in September, and were the most muted since November 2009.

Likewise, cost pressures in the manufacturing sector softened in September, causing the overall rate of cost inflation to fall to the weakest level since April 2009. 

Similarly, output prices at services firms rose at the weakest pace since the current inflationary period began in November 2010 during September. The rate of charge inflation also slowed at manufacturing companies, as selling prices across the private sector rose at the mildest pace in 47 months.

Despite falling to the weakest level in a year, business sentiment regarding future output at Indian services companies remained strong in September. Survey respondents associated optimism with anticipated improvements in demand and new marketing initiatives. (KNN/SD)