The Activity in India's service sector expanded for the second successive month in March to reach at a five-month high on the back of strong rise in new work. The seasonally adjusted Nikkei Services Business Activity Index rose above the critical 50.0 level for the second-month running in March, posting 51.5 from 50.3 in February. Though the input costs facing services firms rose again in March, the improvement in business conditions, rise in output and slight growth in employment helped the index to move upwards. Underpinning the expansion in services activity was a back-to-back rise in new business inflows, while growth of new work also gathered pace in March.
The seasonally adjusted Nikkei India Composite PMI Output Index which measures both manufacturing and services also increased to 52.3 from 50.7 in February, signaling a quicker rise in private sector activity across the country. As per the survey, new business and output rose for the second straight month in March, with rates of expansion accelerating in both cases. Besides, the improvement in business conditions promoted job creation, while confidence towards the year-ahead outlook for activity was at a four-month high. The report further noted that factory new orders increased at the strongest rate since last October.
On the inflation front, the survey stated that input costs facing services firms rose again in March, thereby stretching the current sequence of inflation to seven months. The main items reported to be up in price over the month were fuel and food. In contrast to the trend seen in services, purchase cost inflation in the manufacturing industry softened to a four-month low. Moreover, amid reports of the passing on of higher cost burdens to clients, some services companies raised their own selling prices in March. Overall, the rate of charge inflation was slight, having softened since the preceding month. Services companies indicated that activity is expected to rise over the coming 12 months, with the overall degree of optimism at a four-month high.