Services PMI grows slowest in 3 months

NEW DELHI: India’s services sector expanded at the slowest pace in three months in April, indicating that the economy may not have recovered to the extent expected earlier, according to a private business survey released on Thursday.

The Nikkei India Services Purchasing Manager’s Index ( PMI) slipped to 50.2 from 51.5 in the previous month, with a marginal expansion in employment and new business. Areading of over 50 on the index indicates overall expansion in economic activity while that below the benchmark denotes contraction.

“April PMI data for the Indian service sector show how jittery the current economic environment is igniting concerns among some businesses, despite remaining in growth territory,” Pollyanna De Lima, economist at IHS Markit and author of the report said.

She said the latest results indicate that the road to recovery from the government’s decision, in November last year, to withdraw high-values currency notes as legal tender, is still bumpy and a reminder that the sector is not out of the woods yet. Composite PMI Output Index was down to 51.3 in April from 52.3 in March.

Companies remained cautiously optimistic towards future performance, with 18 per cent of survey participants anticipating lower activity in the year ahead compared with 21 per cent that foresee expansion.

Indian service providers responded to the sustained rise in new business by recruiting additional workers, according to the report. However, the rate of job creation went down and was below the long-run survey average.

The manufacturing employment also increased at a slower pace. “While new proposals, additional marketing campaigns and new offerings would aid the upturn in activity, concerns towards the increasingly competitive environment weighed on confidence,” the report said.

The Nikkei India Manufacturing PMI for manufacturing performance during April matched the index reading of 52.5 reported in the previous month. The report said the quantity of raw materials and semi-finished goods purchased by Indian manufacturers rose in April, in line with the trend recorded throughout the past four months.