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Activity in services industries stabilised in March, underpinned by greater inflows of new work, a private survey showed on Thursday.
From a six-month low of 47.8 in February, the Nikkei India Services Business Activity Index improved to 50.3 in March, signalling that business activity stabilised at the end of the quarter. The 50-mark separates growth from contraction.
March data pointed to a renewed increase in new business placed at Indian service companies in March. Enhanced marketing initiatives and in some instances, discounts were reported to have underpinned new client wins, said a joint statement issued by Nikkei and IHS Markit.
It may be recalled that services activity had suffered for most of last year in the wake of the demonetisation announcement of November 1, 2016. Implementation of Goods and Services Tax (GST) on July 1 was a setback as it weakened the demand in the initial months.
Commenting on the Indian Services PMI survey data, Aashna Dodhia, Economist at IHS Markit, and author of the report, said: “India’s services activity stabilised at the end of the quarter, underpinned by a renewed rise in new work. Anecdotal evidence highlighted an improvement in demand conditions.
“In response to efforts undertaken by the Indian government to formalise the economy, more people are gravitating towards employment as signalled by the latest PMI data. Indeed, job creation accelerated to the quickest since June 2011.
“On the price front, despite softening from February’s recent peak, input cost inflation in the service sector was marked overall.
“Overall, the decline in activity during February proved to be transitory as India’s overall economy returned to expansion territory in March. Output growth in the manufacturing sector again outperformed the service sector, as has been the case since last autumn,” she said.
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