India's Services PMI Continues To Expand In March

A gauge of India’s services sector continued to expand on new orders, better demand.

The India Services Business Activity Index, compiled by IHS Markit, stood at 53.6 in March against 51.8 in February, according to a media statement. A reading above 50 indicates expansion in business activity.

The Composite PMI Output Index, too, rose to 54.3 in March from 53.5 in February.

The upturn—above trend and the quickest in 2022 so far—was attributed to new business wins, strengthening demand conditions and greater consumer footfall due to the relaxation of Covid-19 restrictions.

That said, when looking at the final quarter of FY22, the headline figure posted its lowest average of 52.3 since the opening quarter of this fiscal, falling notably from 57.4 in the preceding three months.

Export orders, however, fell at the fastest pace since September.

Also, service providers reported an increase in operating expenses. The overall rate of cost inflation was the strongest since March 2011, the statement said. Survey participants mentioned higher chemical, fuel, raw material, retail, transportation and vegetable prices, it said.

Some companies opted to pass part of their additional cost burden on to consumers by lifting output prices. That said, the overall rate of charge inflation was moderate and broadly in line with its long-run average. Anecdotal evidence indicated that efforts to secure new work limited price hikes.

Inflation expectations continued to dampen business confidence in March.

Companies remained upbeat towards growth prospects, but the overall level of sentiment remained subdued in the context of historical data.

Although the latest data pointed to a further decline in service sector jobs, the fall was only marginal.