Owing to a slower expansion in new business and employment, growth in India's service sector eased in April. The seasonally adjusted Nikkei Services PMI Business Activity Index fell to 50.2 in April from 51.5 in March. However, the reading stayed above the watershed ‘50’ mark for the third straight month. Expansion has now been registered for three successive months, but the latest reading was the lowest in this period. The seasonally adjusted Nikkei India Composite PMI Output Index which measures both manufacturing and services also decreased to 51.3 in April from 52.3 in March.
As per survey, average input cost inflation slowed from March’s nine-month high amid reports of lower fuel prices partly offsetting higher transport costs arising from lorry strikes, while the rate of charge inflation accelerated. It further noted that advertising campaigns supported the increase in new work growth in the sector, though competitive pressures lowered the growth. The rate of expansion in new business was only marginal overall, having softened from that registered in March. However, the order books at goods producers rose to the greatest extent in six months.
Services companies signalled positive predictions for future output growth. Nonetheless, optimism fell slightly, with around 18% of survey participants anticipating lower activity in the year ahead compared with 21% that foresee expansion. The report also found that that new proposals, additional marketing campaigns and new offerings would aid the upturn in activity, while concerns towards the increasingly competitive environment weighed on confidence. Sentiment among manufacturers improved to a five-month high. Service providers raised their own output charges (on average) in April. Selling prices have now increased for three months in a row. The rate of inflation remained slight and below its long-run average, despite accelerating since March.