India's service sector growth eased to a 4-month low in July due to weaker sales growth and inflationary pressures, survey results from S& P Global showed on Wednesday.
The services Purchasing Managers' Index dropped to 55.5 in July from 59.2 June, which the highest level since April 2011.
However, a score above 50 indicates expansion in the sector.
The overall expansion in the sector was driven by improvements in sales, the offering of new services and workers taking on overtime. In contrast, the rise was curbed by price pressures and US dollar strength.
New orders grew sharply in July amid favorable domestic demand conditions and fruitful advertising. Nevertheless, the rate of expansion was the weakest in four months, linked to fierce competition and unfavorable weather.
Although input price inflation moderated to a 6-month low in July, it remained strong overall on increased costs for food, fuel, materials, staff, retail and transportation.
Selling prices also softened in July from June's five-year peak, but the latest rise in output prices was solid.
Data also showed that employment in the Indian services sector rose only marginally in July and was broadly similar to June.
"In line with concerns that economic growth has weakened as we enter the second fiscal quarter, service providers signaled subdued confidence towards the medium-term business outlook," Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said.
The composite PMI output index came in at 56.6 in July versus 58.2 in June, with manufacturing leading the upturn with the quickest rise in production since last November, while growth of services activity eased to the weakest in four months.
