India's services activity at 3-month high as Covid curbs ease

Activity in India's services sector rose to a three-month high in March, aided by easing of Covid-related restrictions, even as business confidence remained subdued due to inflation concerns that were reaccelerated by the Russia-Ukraine conflict, a private survey showed on Wednesday.

The S&P Global Purchasing Managers' Index (PMI) for services rose to 53.6 in March from 51.8 in February, with companies recording the fastest growth in sales and business activity so far in calendar year 2022. A reading above 50 in the index shows expansion and below that contraction.

However, the headline figure posted its lowest average (52.3) in quarter ended March since the opening quarter of fiscal 2022, falling also notably from the October-December quarter when it was 57.4.


"Input costs rose at sharpest pace in 11 years at the end of fiscal 2021-22, but companies mostly absorbed the additional cost burden and raised final prices only moderately," S&P Global said in the report, and cautioned that going forward, consumers may face higher service charges as cost pressures rise.

Survey participants mentioned higher chemical, fuel, raw material, retail, transportation and vegetable prices.

"The war in Ukraine exacerbated issues in supply chains, triggering a reacceleration in inflation across the Indian service economy," said Pollyanna De Lima, economics associate director at S&P Global, adding that consumers are likely to face soaring prices in the coming months as rising cost burdens feed through to services charges.

Among sub-sectors, finance and insurance emerged as the top-performing category in March, reporting the best trends for sales and output.