Consumer services recorded the fastest increase in average spending. (Representative image)
The seasonally adjusted S&P Global India Services PMI Business Activity Index fell from 57.8 in March to 62.0 in April.
Growth in India’s service sector accelerated in April as strong demand led to the fastest increase in new business and output in nearly 13 years, according to a monthly survey released on Wednesday.
The recovery in demand occurred despite escalating price pressures.
The seasonally adjusted S&P Global India Services PMI Business Activity Index rose from 57.8 in March to 62.0 in April, signaling the fastest expansion in output since mid-2010 amid a recovery in the economy. new business growth and favorable market conditions.
For the 21st consecutive month, the overall figure was above the neutral threshold of 50. In the parlance of the Purchasing Managers’ Index (PMI), a figure above 50 signifies expansion while a score below 50 indicates contraction .
“The services sector in India posted a remarkable performance in April, with strong demand supporting the largest increases in new business and production in just under 13 years. Finance and insurance was the brightest spot, topping the sector growth rankings for both measures,” said Pollyanna De Lima, associate director of economics at S&P Global Market Intelligence.
The companies monitored reported an improvement in international demand for Indian services in April. New export business grew for the third month in a row and at the fastest pace over this period.
On the price front, input costs rose at the fastest pace in three months in April.
According to the members of the survey, food, fuel, medicine, transport and wages were the main sources of inflation. Consumer services recorded the fastest increase in average spending.
The combination of rising input costs and resilient demand prompted service companies to raise selling prices in April. The rate of fee inflation was marked and strongest in 2023 so far.
On the employment front, despite the strong increase in new orders, the workforce in the service sector increased only marginally at the start of the first fiscal quarter. While some companies have increased their workforce due to growing production needs, the vast majority have left them unchanged with enough workers for current needs.
“One of the weak points highlighted in the latest results is the labor market. Despite the substantial pick-up in sales growth and improving business sentiment about the outlook, the increase in employment seen in April was negligible and failed to gain traction. Lima said.
Looking ahead, marketing efforts, competitive pricing plans and an increased focus on customer relations boosted business confidence in April.
“Nearly 22% of businesses expect business activity to grow over the next 12 months, compared to 2% who expect a reduction,” the survey said.
Meanwhile, the S&P Global India Composite PMI Output Index – which measures the combined output of services and manufacturing – fell from 58.4 in March to 61.6 in April, its highest level since July 2010.
Despite the substantial recovery in sales, job creation in the private sector remained subdued. Expansion rates were broadly similar in manufacturing firms and their services counterparts.
At the composite level, input costs rose at the fastest pace since January and expense inflation hit a four-month high.
The S&P Global India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of approximately 400 service sector companies. The panel is stratified by detailed sector and firm employment size, based on contributions to GDP. Data collection began in December 2005.
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