New Delhi: The services sector in India witnessed some activity in April as it grew at its fastest pace in past five months on strong demand, according to a report by Reuters.
The Purchasing Managers’ Index (PMI), conducted by S&P Global India Services, rose to 57.9 in April from 53.6 in March, highest since November. It also surpassed previous estimate of 54.0 in a Reuters poll.
On the base of such robust demand in the services sector, companies add jobs for the first time since November, a private survey revealed. However, skyrocketing inflation still remained a major cause for concern.
The report suggested that it was the best start to a financial year for the services sector since FY11-12, as the index remained above the 50-mark separating growth from contraction for a ninth straight month.
Pollyanna De Lima, economics associate director at S&P Global, said, “In isolation, the PMI data for the service sector were mostly encouraging, as surging demand underpinned quicker increases in new business inflows and output. Consumer services and finance and insurance were the top-performing areas of the service economy, while real estate and business services was the only sub-sector to post contractions in sales and output.”
Easing of Covid-19 restrictions helped new businesses rose to a five-month high. However, ongoing war between Russia and Ukraine and fresh Covid curbs in China have contracted growth of then new businesses quickly. A slowdown have dragged over global economy.
Companies are still increasing their workforce for the first time in five months, albeit at a marginal rate. The report said that kind of weak growth is unlikely to boost the employment situation significantly.
India, like several other global economies, is also feeling the brunt of surging inflation, which accelerated to a 17-month high in March.
Persistently high inflation rates pushed the Reserve Bank of India (RBI) to hike its key lending rate by 40 basis points on Wednesday.
“Service providers reported having paid more for food, fuel, and materials, with some mentions of higher wage costs also pushing up overall expenses," De Lima added.