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India’s service sector falls to six month low of 52 in March

04 Apr 2019 Evaluate

Falling to a six-month low, India’s services sector grew at slower pace, on the back of a slower expansion in new work. At the same time, the pace of staff hiring was also the weakest since last September. As per the survey report, the seasonally adjusted Nikkei Services Business Activity Index eased to 52 in March from 52.5 in February. Further, the Nikkei India Composite PMI Output Index -- which measures both manufacturing and services – also slipped to 52.7 in March as against 53.8 in February.

The report found that the rate of expansion in new business placed with services companies eased since February. Growth was curtailed by subdued bookings and competitive pressures. Besides, there was a further rise in backlogs of work, which service providers continued to link to difficulties in obtaining outstanding payment from clients. The pace of increase in backlogs was the second-fastest since October 2017.

On the inflation front, input cost inflation in the service sector eased, while acceleration was seen for services charges. Meanwhile, business sentiment among service providers strengthened to a six-month high. Predictions of greater inbound tourism, marketing efforts and wider product offerings boosted confidence in March.

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