India Services PMI at a 19-month low of 48.7 in September. Down from 52.4 in August. Contracts for the second time this year.

Purchasing Managers’ Index (PMI) for services had come down to 52.4 in August from 53.8 in July.

Services PMI is an economic indicator that is taken into consideration by various policy makers, including the Reserve Bank of India, for policy rate revision.

It was the second month this year the index had fallen below the 50-mark separating growth from contraction – the last one being in June. A manufacturing survey earlier this week also showed a cooling in activity.

“The bad news of a cooling manufacturing sector was compounded by an outright services downturn in September,” Pollyanna De Lima, principal economist at IHS Markit, said in a release.

The weak manufacturing and dismal services sector activity dragged down the composite PMI to just below the 50-mark for the first time since February 2018.

Moreover, the outlook held out little hope for a turnaround anytime soon either, with an index tracking overall demand for services falling to 48.8 in September, a 19-month low.

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India’s economy has been hobbled by a demand slump, prompting policymakers to step up fiscal and monetary stimulus to revive growth.

The Reserve Bank of India, which has already slashed rates by 110 basis points so far this year on the back of the low growth and below-target inflation, is expected to ease further later on Friday.

Yet, despite the supportive measures firms do not appear convinced the services sector will emerge from the slump anytime soon, the survey showed. Optimism about the next 12 months was the lowest in 2-1/2 years.

“Policymakers will hope that monetary and fiscal stimuli can boost domestic demand as well as business investment, thereby restoring economic growth in the months to come,” De Lima said.

“A drop in aggregate input cost inflation to its lowest in around three years raises the possibility of a further cut in the benchmark interest rate.”

Input costs grew at the slowest pace in over 2-1/2 years last month but firms raised prices to clients a touch faster than they did in August.