Financial News: India Services Growth Strongest In 13 Years

India Services Growth Strongest In 13 Years

(RTTNews) - India's service sector activity increased significantly in April to reach its highest level in over a decade, underpinned by strong demand conditions, results of the purchasing managers' survey by S&P Global showed on Wednesday.

The services Purchasing Managers' Index, or PMI, climbed to 62.0 in April from 57.8 in March. A score above 50 indicates expansion in the sector.

Finance and insurance saw the greatest rise in output among the four monitored sub-sectors.

New orders grew at the fastest pace since mid-2010, linked to strong demand for services and competitive pricing.

Foreign demand for Indian services also improved in April with new export orders expanding for the third successive month and at the fastest pace over this period.

Data from the Reserve Bank of India showed on Tuesday that services exports grew 13.1 percent year-on-year in March, following a 28.8 percent increase in February.

On the price front, input costs rose at the quickest pace in three months, led by higher prices for food, fuel, medicine, transportation, and wages. Despite the escalating price pressures, service demand picked up at the start of the second quarter.

Service providers were forced to raise their selling prices in April as a result of both growing input costs and resilient demand. The rate of charge inflation was marked and the strongest in 2023 so far.

Companies became more optimistic about future business activity. However, employment levels in the service sector increased slightly in April, as the vast majority of companies had sufficient workers to meet current requirements.

"One area of weakness highlighted in the latest results was the labor market," Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said.

"Despite the substantial pick-up in sales growth and improved business sentiment towards the outlook, the increase in employment seen in April was negligible and failed to gain meaningful traction."

The country's unemployment climbed to a four-month high of 8.11 percent in April from 7.8 percent in March, Bloomberg reported this week citing data from the think tank Centre for Monitoring India Economy.

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