India’s services sector recorded its highest uptick in new business and output levels since June 2010 this April, led by a strong upturn in the Finance and Insurance segment, as per the seasonally adjusted S&P Global India Services PMI® Business Activity Index, which rebounded from a decline to 57.8 in March to 62 in April.
A reading of 50 on the index indicates no change in business activity levels
New export orders expanded for the third month in succession and at the fastest pace over this period. However, job creation remained negligible in April and input cost inflation, which had hit a two-and-a-half-year low in March, resurged to a three-month high with firms reporting a rise in costs on food, fuel, medicine, transportation and wages.
Consumer services firms recorded the fastest upturn in average expenses, as per the Survey-based monthly indicator, but all Services sectors raised selling prices at the fastest pace in 2023, with the most acute price hikes undertaken by transport, information and communication businesses.
Business confidence which had plummeted to an eight-month low in March, revived a bit in April. Close to 22% of surveyed companies forecastgrowth of business activity over the course of the coming 12 months, compared with 2% that anticipate a reduction, S&P Global said.
“India’s service sector posted a remarkable performance in April, with demand strength backing the strongest increases in new business and output in just under 13 years,” noted Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.
“One area of weakness highlighted in the latest results was the labour market. Despite the substantial pick-up in sales growth and improved business sentiment towards the outlook, the increase in employment seen in April was negligible and failed to gain meaningful traction,” she added.
Outstanding business volumes increased for the sixteenth straight month, but rose “only marginally” in April, reflecting the slowest growth in sixteen months.
The services sectors’ performance lifted overall output in India’s private sector to the highest level since July 2010, with aggregate sales also rising at the fastest pace in almost 13 years. The S&P Global India Composite PMI Output Index rose from 58.4 in March to 61.6 in April. The S&P Global Manufacturing PMI had risen to a four-month high of 57.2 in April.
“Despite the substantial upturn in sales, job creation across the private sector remained mild. Rates of expansion were broadly similar at manufacturing firms and their services counterparts,” S&P Global underlined.