Service sector activity rose for the third straight month in April, though at a slower pace, according to a monthly private survey.

The Nikkei Services PMI Business Activity Index was down from 51.5 in March to 50.2 in April, according to a statement on Thursday.

A reading above 50 on the index denotes expansion while one below the benchmark indicates contraction.

“Indian service sector activity continued to expand during April, supported by ongoing growth of new work, and companies hired additional staff over the month,” Nikkei said in the release, while noting that in all three cases, the rates of increase weakened.

Similarly, signalling a softer pace of expansion, the Nikkei India Composite PMI Output Index was down from 52.3 to 51.3 in April.

‘Jittery environment’ “April PMI data for the Indian service sector show how jittery the current economic environment is, igniting concerns among some businesses, despite remaining in growth territory,” said Pollyanna De Lima, economist at IHS Markit, and author of the report, adding that it indicates that the road to recovery from the note ban is still “bumpy”.

The survey noted that advertising campaigns supported the increase in new work growth in the sector amid competitive pressures though growth was stymied by competitive pressures.

Further, only two of the six monitored service categories registered higher incoming new work, namely post and telecommunication and other services.

Companies however, were more optimistic about future output growth though 18 per cent of the participants anticipated lower activity in the year ahead while 21 per cent expect expansion.

While firms hired additional workers to meet new orders, the rate of job creation eased and was below the long-run survey average.

The survey also revealed that average input cost inflation slowed from March’s nine-month high amid reports of lower fuel prices partly offsetting higher transport costs arising from lorry strikes.

With service providers increasing output charges in April, selling prices increased for the third straight month.

Related Topics