Services growth down a bit but still expanding

The growth of services sector eased a bit April, according to a monthly data released on Monday. The growth of new business and output remained sharp and among the fastest in 14 years.
The HSBC India Services Business Activity Index fell from 61.2 in March to 60.8 in April. The
survey members attributed the latest upturn in output to favourable economic conditions, demand strength and rising intakes of new work.

In the Purchasing Managers’ Index (PMI) parlance, a figure of above 50 means expansion, while a score below 50 denotes contraction.
“India’s service activity rose at a slightly softer pace in April, backed by a further rise in new orders, with a notable strength in domestic demand,” said Pranjul Bhandari, Chief India Economist at HSBC.

In addition to buoyant domestic demand, firms noted new business gains from several parts of the world, which collectively underpinned the second-quickest upturn in international sales since the series started in September 2014.

On the job front, a few service providers in India showed an increased appetite for new hires in April, amid rising inflows of new business. However, several companies indicated that payroll numbers were sufficient for current requirements, and the rate of job creation was marginal and softer than that seen at the end of the previous fiscal year.

On the price front, wage pressures and higher food prices meanwhile led to another increase in cost burdens, which firms partially passed on to their customers.

Meanwhile, confidence among service providers towards the year-ahead outlook for business activity improved to a 3-month high.

Marketing efforts and efficiency gains, alongside plans to price competitively and predictions that demand conditions will remain favourable, boosted optimism, the survey said.

(With inputs from PTI)