New Delhi: India’s services sector saw some activity in April as it grew at its fastest pace in five months on strong demand, according to a Reuters report.
The Purchasing Managers Index (PMI), produced by S&P Global India Services, rose to 57.9 in April from 53.6 in March, the highest since November. It also topped the previous estimate of 54.0 in a Reuters poll.
On the back of such robust demand in the services sector, companies are adding jobs for the first time since November, a private survey has found. However, soaring inflation remained a major source of concern.
The report suggests this is the best start to the year for the services sector since fiscal 2011-12, with the index remaining above the 50 mark separating growth from contraction for a ninth month consecutive.
Pollyanna De Lima, associate director of economics at S&P Global, said: “As a stand-alone, the PMI data for the services sector was mostly encouraging, as rising demand supported a faster rise in inflows and generation of new businesses. Consumer services, finance and insurance were the best performing sectors in the service economy, while real estate and business services were the only sub-sector to show a contraction in sales and demand. production.
The easing of Covid-19 restrictions helped new businesses hit a five-month high. However, the ongoing war between Russia and Ukraine and new Covid restrictions in China have rapidly reduced the growth of new businesses. A slowdown has dragged on the global economy.
Companies continue to increase their workforce for the first time in five months, although at a marginal pace. The report says this kind of weak growth is unlikely to boost the employment situation significantly.
India, like several other global economies, is also feeling the brunt of soaring inflation, which accelerated to a 17-month high in March.
The persistence of high inflation rates prompted the Reserve Bank of India (RBI) to raise its key rate by 40 basis points on Wednesday.
“Service providers reported paying more for food, fuel and materials, with some mentions of higher labor costs also driving up overall spending,” De Lima added.