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Growth in services PMI falls to 17-month low in March to 51.4

03 Apr 2013 Evaluate

Growth in services sector, which make up nearly 60% of country’ economics output, eased in March to its slowest pace in 17 months as order books filled at a slower pace. As per the HSBC services Purchasing Managers’ Index (PMI), based on a survey of around 400 companies, fell to a 17-month low of 51.4 in March from 54.2 in February.

The services sector growth which rose an 18-month high in January, fell for its second straight month in March to its lowest since November 2011, but it has held above the 50 mark that separates growth from contraction - for the seventeenth successive month. Despite being solid, the pace of expansion eased to the slowest in the current sequence of growth notably due to a deceleration in new business flows.

The greater flow of new business in the service sector resulted in higher backlogs of work, which increased the workloads during the month. In tandem with the higher workloads, service providers also raised their headcounts modestly, marking a 13-month sequence of employment growth.   

Similarly, reflecting the weakest improvement in operating conditions, the HSBC India Composite Output Index, which measures activity in both the manufacturing and services sector, declined to 51.4 in March from 54.8 in February. Further, March data signaled broadly steady inflation reading even as input prices continuing the trend that started in April 2009, rose during March. Subsequently, services companies increased their selling prices.

However, the rate of output charge inflation was, however, moderate and weaker than February. Furthermore, optimism was signaled by service providers in India in March and the degree of confidence was the strongest registered since December 2012. Service sector firms linked positive sentiment to expectations of stronger demand and planned investment in marketing. 

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