New Delhi, Sept 3 (KNN) The service sector activity in the country moderated in August, at its weakest rate in three months, as the new business expanded at a weaker pace, according to a survey.

The HSBC/Markit purchasing managers' index for the services industry stood at 50.6 in August, down from 52.2 in July, indicating a slowdown in the sector activity. A number above 50 denotes growth while anything below implies contraction.

The new business sub-index fell to 51.9 from 52.6, a three-month low.

"Growth in service sector activity slowed in August. Moreover, the improvement in new business flows and business optimism moderated," HSBC Co-Head of Asian Economic Research Frederic Neumann said.

“Services activity is once again turning down following a swift post-election uptick, suggesting that an improvement in reform momentum is needed to lift sentiment in the sector. On the positive side, weaker activity has softened inflation indicators within the survey," he added.

However, the reading highlighted a fourth consecutive monthly expansion in service sector output. 

Indian services firms registered a fourth successive monthly rise in new orders in August, although the pace of expansion slowed from July.

Workforce numbers in the Indian service sector were unchanged in August, as the vast majority of survey participants signalled no change in employment. Overall, staffing levels in the private sector remained broadly stable, as has been the case for the past five months, the survey said.

Backlogs of work held by Indian services companies continued to grow in August, extending the current sequence of accumulation to six months. However, the rate of increase was modest overall. While growth of outstanding business accelerated at manufacturers, backlogs across the private sector expanded at the slowest pace in the current period of accumulation.

Input prices faced by Indian service sector firms increased in August, although the rate of cost inflation eased to the weakest since July 2013, it added. (KNN/SD)