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
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.