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The service sector has seen a marginal improvement in March, according to an HSBC/Markit survey. The sector has a share of over 57 per cent in the country’s gross domestic product (GDP).
The HSBC Purchasing Manager Index (PMI) for Services came down to 53 in March from 53.9 in February.
“India’s service sector ended the first three months of 2015 with a strong performance, providing signals that much of the weakness seen in 2014 has been left behind. Despite softening slightly since the prior month, growth of activity and new business in the sector was robust. These figures taken in conjunction with manufacturing mark a good quarter for businesses,” said Pollyanna De Lima, Economist at financial information services provider Markit, which compiles the survey.
Payroll numbers steady The private sector labour market saw payroll numbers stabilise in March, she said, adding that with unfinished business rising at a faster rate, companies are likely to start hiring in the coming months.
“Worryingly, however, cost inflationary pressures in the private sector as a whole firmed. Whereas output prices also increased, firms are still struggling to pass on the full extent of input price rises to clients amid fierce competition,” she added.
The survey said that the latest reading was indicative of a moderate rate of expansion that was slightly weaker than the prior month.
Anecdotal evidence highlighted sustained new business growth, the survey showed. Output rose in four of the six broad areas of the service economy, the exceptions being Financial Intermediation and Hotels & Restaurants.
Service providers remained upbeat on the prospects for business activity in 12 months’ time.
On prices, HSBC said the cost inflationary pressures in the private sector as a whole firmed in March.
Inflation Meanwhile, inflation measured by the wholesale price index (WPI) was at (-) 0.39 per cent in January, (-) 0.50 per cent in December and (-) 0.17 per cent in November, respectively.
With inflation dropping to record lows, industry is demanding a further easing of interest rates to boost growth.
Combined with manufacturing data, the Composite Output data showed a marginal decrease and fell to 53.2 in March from 53.5 in February. Still, the survey believed that business activity in the Indian private sector economy expanded for the 11th consecutive month in March.
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