Growth in Ser­vices Picks up Pace as De­mand Gal­lops; On a Par with Mfg

Ser­vices Busi­ness Ac­tiv­ity Index climbs to 54.3 in March from 51.4 in Feb, match­ing Jan’s 19-month high

The Economic Times - - Economy - Our Bureau

New Delhi: Growth in In­dia’s ser­vices sec­tor picked up pace in March on the back of a strong in­crease in de­mand, a pri­vate sur­vey showed, match­ing the strong per­for­mance of the man­u­fac­tur­ing sec­tor.

The sea­son­ally ad­justed Nikkei In­dia Ser­vices Busi­ness Ac­tiv­ity Index climbed to 54.3 in March from 51.4 in Fe­bru­ary, match­ing Jan­uary’s 19month high, data re­leased on Wed­nes­day showed. A read­ing above 50 on this sur­vey-based index in­di­cates ex­pan­sion. On Mon­day, the same or­gan­i­sa­tion’s sur­vey had shown an uptick in man­u­fac­tur­ing busi­ness con­di­tions, with the man­u­fac­tur­ing PMI record­ing its eight-month high of 52.4.

The com­bined read­ing, cap­tured through the Nikkei In­dia Com­pos­ite PMI Out­put Index, climbed to a 37month high of 54.3 from 51.2 in Fe­bru­ary, sug­gest­ing a strong re­cov­ery in bu-

si­ness ac­tiv­ity in the last month of the fi­nan­cial year.

“March PMI sur­veys sig­nalled a re­as­sur­ingly ro­bust end to the fi­nan­cial year for the econ­omy, with sharper in­creases in new busi­ness spurring ac­tiv­ity growth in the man­u­fac­tur­ing and ser­vices sec­tors,” said Pollyanna De Lima, econ­o­mist at Markit, the agency that com­piles the index.

Some of the other in­di­ca­tors have also looked up of late. Most auto com­pa­nies re­ported strong sales in March while core sec­tor growth re­bounded to a 15-month high of 5.7% in Fe­bru­ary. The sur­vey said that in­com­ing new work in the In­dian pri­vate sec­tor econ­omy rose for the ninth month run­ning and at the fastest pace in over three years. Stronger in­creases were noted in both the man­u­fac­tur­ing and ser­vices sec­tors, which com­pa­nies as­so­ci­ated with an im­proved de­mand en­vi­ron­ment.

“One dis­ap­point­ment, how­ever, is the trend in em­ploy­ment, which showed lit­tle change through much of 2015-16,” De Lima said. Job cre­ation across the pri­vate sec­tor as a whole was seen for the sixth straight month, but the rate of growth re­mained frac­tional over­all.

In­dian ser­vices com­pa­nies re­mained op­ti­mistic that ac­tiv­ity will in­crease fur­ther over the com­ing12 months. The level of con­fi­dence was at a ninemonth high, with pos­i­tiv­ity linked to favourable gov­ern­ment poli­cies and fore­casts of a pick-up in de­mand.

Sub-sec­tor data in­di­cated that ac­tiv­ity rose in five of the six mon­i­tored cat­e­gories—ho­tels and restau­rants, post and telecom­mu­ni­ca­tions, fi­nan­cial in­ter­me­di­a­tion, rent­ing and busi­ness ac­tiv­i­ties, and other ser­vices—ex­cept trans­port and stor­age.

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