India’s services sector growth remains in positive territory for 20 consecutive months with PMI for March coming in at 57.8. The levels above 50 indicate a growth territory.
Despite falling from 59.4 in February and thereby indicating a slower rate of expansion, the latest figure was consistent with a substantial uptick in output. Favourable demand conditions and new business gains were among the reasons cited for the latest rise. Similar to output, new business inflows increased at a softer but still sharp rate in March.
According to survey members, demand resilience, competitive pricing and marketing efforts warranted a further uptick in sales. The rise in overall new business was supported by an increase in international sales. Companies commonly mentioned an improvement in external demand for their services. There was a further increase in input prices at Indian services firms, amid reports of higher food, fuel, transportation and wage costs.
However, with a large proportion of survey participants signalling no change in expenses since February, the overall rate of inflation was mild and the weakest in two-and-a-half years. Backed by demand buoyancy, service providers shared part of their additional cost burdens with clients in March via an upward revision to selling prices. The rate of charge inflation picked up to a three-month high but was moderate.
On composite PMI, March data highlighted another upturn in aggregate business activity across India. Despite falling from 59 in February to 58.4 in March, S&P Global India Composite PMI Output Index pointed to a sharp rate of expansion that was above its long-run average. Private sector sales rose for the twentieth consecutive month in March, amid sustained increases in goods producers and service providers.
The overall pace of expansion was sharp, despite easing from February. In contrast to the trend for input costs, there was a quicker increase in private sector charges. The rate of inflation quickened to a three-month high but remained moderate overall.
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