INDIA SERVICES PMI RISES TO 5-MONTH HIGH OF 57.9 IN APR

THE SECTOR POSTED BETTER NUMBERS DESPITE HIGHER TRANSPORT AND INPUT COSTS

Activity in the country's services sector recovered strongly in April as pandemic-related restrictions eased and demand conditions turned favourable.

According to S&P Global, the services Purchasing Managers' Index sharply rose to a five-month high of 57.9 in April from 53.6 a month ago.

A reading above 50 indicates expansion in activity, while one below that level points to a contraction.

"Despite higher transport and input costs, the services sector posted better numbers amid ongoing gains seen in high-contact services sector, and also in new business orders," Rahul Bajoria, MD & Chief India Economist, Barclays said.

The composite PMI, which is a weighted average of the manufacturing and services indices, rose to a fivemonth high of 57.6 in April from 54.3 in March, highlighting the quickest pace of growth in five months.

Data released on Wednesday showed that the manufacturing PMI rose to 54.7 in April from 54.0 in March. While the April print indicated that services activity returned to pre-omicron level, the intensification of inflationary pressures posed downside risk to the growth of the sector. Soaring operating expenses at services firms led to higher chemical, food, fuel, labour, material and retail costs.

"Having accelerated from March, the overall rate of inflation was sharp and the second-strongest since data collection started in December 2005," S&P Global said in a report. As a result, Indian service providers hiked their selling prices again at the start of the fiscal.

Concern about inflation restricted business confidence in April and the overall level of sentiment slipped from March. The sharpest increase in input costs was seen in the consumer services sector, and charge inflation was most pronounced in transport, information & communication.