The growth of India’s service sector eased in the month of March but it remains above the boom-or-bust line of 50 that separates expansion from contraction, on the back of increases in new business and output at Indian services firms, as companies benefited from strong demand conditions and the elections.
As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index fell to 54.6 in March from 55.3 in February. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services - also eased to 56.0 in March from 57.3 in February. The report further said that new orders rose in March, stretching the current sequence of expansion to six months. Although easing from February, the pace of increase was solid and surpassed the long-run series average. The upturn was associated with the elections, higher demand and successful marketing.
Services companies reported higher expenses in March. The rate of input cost inflation was sharp and outpaced its long-run average, despite slowing from February's eight-year high. A few firms lifted their selling prices amid efforts to protect margins given ongoing increases in input costs. At the same time, the vast majority of companies left their fees unchanged due to competitive pressures. As a result, there was only a fractional rise in average output charges.