Services sector activity rose for the second straight month and grew at its fastest pace in five months in March as new orders and output continued to grow, according to a monthly survey.
The Nikkei India Services Business Activity Index rose to 51.5 in March from 50.3 in February.
A reading above 50 on the index denotes growth while that below the benchmark indicates contraction.
The upturn in manufacturing production also accelerated in March, reaching a five-month high. Subsequently, the seasonally adjusted Nikkei India Composite PMI Output Index increased to 52.3, from 50.7 in February.
The rise in new orders was led by growth in the renting and business activities and ‘other services’ categories, with reductions noted in other sectors.
“Underpinning the expansion in services activity was a back-to-back rise in new business inflows,” Nikkei said in a release on Thursday, adding that the improvement in business conditions promoted job creation.
Biz confidence up The business confidence amongst respondents towards the year-ahead outlook for activity was at a four-month high.
“Almost 24 per cent of the panellists signalled positive sentiment, with better marketing campaigns, strengthening demand conditions, plus hopes that the Goods and Services Tax bill will be favourable to businesses,” it added.
“By historical standards, the increases in new work and activity remain relatively mild, though growth is likely to gather speed as we head into the new financial year,” said Pollyanna De Lima, economist at IHS Markit, and author of the report.
She further said that the economy seems to have recovered from the demonetisation-related downturn with higher job creation and softer inflationary pressures.
Despite rising input costs, including that of food and fuel, the rate of inflation change was slight, having softened since the preceding month.