Growth in Chinese and Indian services sector, two of the world’s fastest growing economies eased sharply in April, a survey by HSBC showed on Monday. The HSBC services Purchasing Managers’ Index (PMI) of China fell to 51.1 in April from 54.3 in March while that of India fell to 50.7 in April from 51.4 a month earlier.
A reading above 50 suggests activity in the sector is growing, while the same below 50 indicates it is contracting.
“The rate of expansion of new orders in China was the weakest since August 2011. In April, staffing levels in the Chinese service sector also decreased for the first time since January 2009.” said the HSBC China note.
China’s annual economic growth slipped to 7.4 percent in the third quarter, slowing for seven consecutive quarters and leaving the economy on course for its weakest showing since 1999, said Reuters.
The HSBC India note says, “The pace of growth was the slowest in the current one-and-a-half year period of expansion. Total new business also rose at a weaker rate, although job creation was maintained.”
Service sector accounts for almost 60 percent of India’s GDP, so a slowdown in this sector is a bad sign for India. Last week data showed India’s manufacturing activity growth also came to halt. RBI has also ruled out further easing of monetary policy and thrust now remains on the government to announce more measures to revive growth in the manufacturing and services sector.