GDP growth slowed sharply to a pace of 4.5 per cent in the July-September, hit by a slump in manufacturing output.
Last time services activity contracted for two consecutive months was in August 2017 following the GST implementation.
The report indicates only a marginal improvement in the health of the manufacturing industry, the survey said.
The IHS Markit India Services Business Activity Index fell to 48.7 in September from 52.4 in August.
Both the manufacturing and services industry, fell from 53.9 in July to 52.6 in August.
On the employment front, the survey said weak sales prevented manufacturing firms from replacing retirees and voluntary leavers.
The IHS Markit Services Purchasing Managers’ Index rose to a one year high of 53.8 in July, up from 49.6 in June.
This is the 24rd consecutive month that the manufacturing PMI has remained above the 50-point mark.
On the prices front, the survey noted that, firms were also helped by a lack of inflationary pressures in the sector.
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