<p>India's dominant services industry contracted for a second month in June as new business again declined, suggesting Asia's third-largest economy is struggling to maintain growth, a survey showed on Friday (3 July).<br><br>Any weakness in the economy, alongside subdued inflation, will likely add to expectations the Reserve Bank of India will ease monetary policy sooner rather than later.<br><br>The Nikkei Services Purchasing Managers' Index, compiled by Markit, dropped to a 15-month low of 47.7 in June from May's 49.6, well below the 50-level that separates growth from contraction.<br><br>Five out of the six industries monitored reported falling activity and the new orders index sank to 47.3, its lowest level since December 2013.<br><br>Weak demand also curtailed factory growth, a sister survey showed on Wednesday.<br><br>"June's Indian service sector data disappointed," said Pollyanna De Lima, an economist at Markit.<br><br>"All in all, latest data suggest that the Reserve Bank of India's commitment to support economic growth may result in further rate cuts at its August meeting," she added.<br><br>At the latest meeting in June, Governor Raghuram Rajan left the door open to a further cut from 7.25 percent if inflation remains subdued.<br><br>The survey showed prices rose at a slower pace last month, and as retail inflation has plunged since January 2014 the RBI has had room to cut its key interest rate three times already this year.<br><br>Still, according to a Reuters poll conducted after last month's cut, the RBI is expected to wait until at least October, after the vital monsoon rains, to reduce rates again.<br><br>(Reuters)</p>
