India's services sector expands at fastest pace so far this year in March
In March, India's services sector grew at its fastest pace this year, bolstered by the relaxation of Covid-19 restrictions, but business morale was harmed by rising inflationary pressures.
The S&P Global India Services Purchasing Managers' Index increased to 53.6 in March from 51.8 in February, surpassing a Reuters poll's prediction of 52.5. While the index remained above the 50-mark separating growth from contraction for an eighth straight month, input costs rose at the sharpest pace in 11 years. Chemical, fuel, raw material, retail, transportation, and vegetable prices all rose, putting a damper on business confidence.
The war in Ukraine exacerbated persistent supply chain concerns, resulting in a reacceleration in inflation across the Indian service industry, according to Pollyanna De Lima, an economist at S&P Global.
Domestic demand improved as a result of increased traffic, resulting in higher sales and a three-month high for the new business sub-index. However, as a result of the Russia-Ukraine conflict, worldwide demand shrank at its fastest pace in six months.
Only a few companies passed on the cost burden to customers, causing prices to rise modestly.
In March, businesses cut their personnel for the fourth month in a row, but there were some tentative signs of stabilisation. The employment sub-index was at its greatest point in this contraction sequence, just below the 50-point mark.
In March, the composite index reached its highest level in three months, rising from 53.5 to 54.3.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.