New Delhi, July 4 (KNN) Service sector which comprises a large number of formal and informal MSMEs is also slowing down along with the manufacturing sector.

The HSBC/Markit purchasing managers’ index for the services industry, which was released yesterday, fell 51.7 in June. In May's it was at its three- month high at 53.6.

The services sector contributes 60 per cent to the country's GDP.

The services sector witnessed moderation in June as the pace of growth in new orders placed at private sector firms in India during the month was the weakest in the last 50 month period, HSBC said.

HSBC also said that the subdued economic conditions were also a major factor behind the deceleration in output growth.

A reading above 50 shows that the sector is expanding, while that below 50 shows that the output in the sector is contracting.

"Service sector activity grew at a slower clip as new business flows moderated, which made businesses less optimistic about the year ahead," HSBC Chief Economist for India and ASEAN Leif Eskesen said.

The slower pace of growth in the services sector is reflected in service providers' subdued optimism towards output growth in the next 12 months, the survey said.

One July 1, the HSBC/Markit manufacturing PMI showed that the manufacturing sector output remained broadly flat in June as new orders declined for the first time in over four years.

The HSBC Purchasing Managers’ Index  (PMI) recorded above the no-change threshold for the fiftyfirst consecutive month in June. At 50.3, up slightly from 50.1 in May, the latest index reading was consistent with a marginal expansion of the country’s manufacturing sector, said the survey.

Indian manufacturing output fell for second consecutive month in June. 

Accordingly, the HSBC India Composite Output Index, which maps both services and manufacturing activity, declined from 52.0 in May to 50.9 in June.

Further, the report said that the faster rates of inflation were signalled in the Indian private sector during June as input prices raised solidly, amid higher raw material, labour and fuel costs.

"Notwithstanding the slowdown, inflation readings firmed (up) on the back of higher labour and raw material prices, with the depreciation of the Rupee also cited as a factor," Eskesen said.

The rupee last week fell to an all-time low of 60.76 against dollar.

With domestic economic growth stuck at a decade low and prospects of a strong global recovery still uncertain, overall demand for Indian services took a hit in June. (KNN)