New Delhi, Oct 6 (KNN) India’s Composite PMI Output Index fell from 52.6 in August to 51.5 in September 2015, according to a survey. The slowdown reflected weaker increases in both manufacturing and services output.

The seasonally adjusted Nikkei India Composite PMI Output Index fell from 52.6 in August to 51.5 in September 2015, highlighting the weakest rate of expansion in the current period of growth.

Down from 51.8 in August to 51.3 in September, the seasonally adjusted Nikkei Business Activity Index pointed to a slight and softer expansion of services output across the country. Whereas higher new business was reported to have led activity to increase, there were mentions that tough economic conditions weighed on growth.

Incoming new work at service providers rose for the third month in succession during September, but the rate of expansion eased since August. Where growth was noted, this was attributed to improved marketing strategies and increased demand. New order growth in the goods producing sector also softened and was the weakest since June.

As a consequence of the slowdown, Indian service providers maintained employment levels broadly unchanged in September. This was indicated by the respective index recording only fractionally below the crucial 50.0 threshold. A similar trend was seen in the manufacturing sector.

Input costs faced by services firms decreased in September for the first time in ten months, with survey participants reporting lower petrol prices. The decline in cost burdens was, however, only marginal. With purchase prices also falling at manufacturers, overall input costs across the private sector as a whole declined for the first time in six-and-a-half years.

Data indicated that private sector businesses passed falling input prices on to clients as tariffs were lowered on average. Although only marginal, the latest decrease in output prices was the first recorded since the financial crisis. The decline in charges was broad-based by sub-sector, with reductions seen in both manufacturing and services.

The level of outstanding business held by Indian service providers fell again in September. This was the third consecutive monthly drop in backlogs, although the rate of depletion was marginal overall. Ongoing spare capacity at manufacturers had also resulted in a reduction of work-in-hand.

Services activity is expected to rise over the coming 12 months, with firms linking optimism to favourable government policies, planned increases in marketing budgets and hopes of better economic conditions. That said, the degree of confidence was the weakest registered in the survey history.

Commenting on the Indian Services PMI survey data, Pollyanna De Lima, economist at Markit, which compiles the survey, said: "India's economy lost steam in September, with growth fading across both the manufacturing and service sectors. The sluggish increase in private sector output mirrored softer demand conditions across the country, while growth of global demand for Indian goods also moderated.

"Vital to the resilience of India's economy, price pressures dissipated in September. Lower commodity prices coupled with falling petrol costs resulted in an overall drop in average input prices. On the back of this, businesses lowered their tariffs.

"Looking ahead, service providers expect further setbacks, as highlighted by the Future Output Index sliding to its lowest mark in the history of the series. That said, the RBI continued its attempt to shift India's growth momentum into a higher gear. The repo rate was cut for the fourth time in 2015 so far and now stands at a four-and-a-half year low of 6.75per cent." (KNN Bureau)