India’s services sector growth at one-year high

BENGALURU: India’s dominant services activity grew at its fastest pace in a year last month, driven by an extended robust recovery in domestic demand though input costs rose at the quickest rate in eight years, a private survey showed.

Asia’s third-largest economy came out of a technical recession and expanded 0.4% annually last quarter and the recovery is widely expected to gather pace in the year ahead amid hopes a successful vaccine rollout will boost business activity.

The Nikkei/IHS Markit Services Purchasing Managers’ Index (PMI) rose to 55.3 last month from 52.8 in January, its highest since February 2020, just before the coronavirus pandemic hit the economy.

It has stayed above the 50-level mark separating growth from contraction for the fifth straight month as a sub-index tracking new business orders hit a year high. The positive impulse came despite a persistent contraction in foreign demand, albeit the pace of the downturn was the slowest since March 2020.

“Economic activity is generally expected to recover in the final quarter of fiscal year 2020/21 after coming out of technical recession in (fiscal) third quarter, and the latest improvement in the PMI indicators points to a strong expansion in the fourth quarter should growth momentum be sustained in March, ” said Pollyanna De Lima, economics associate director at IHS Markit.

The economic rebound and the solid recovery in manufacturing activity helped boost the composite PMI to a four-month high of 57.3 in February.

Still, services firms reduced headcount at the sharpest pace in three months, signalling the bruised labour market will take more time to fully recover.

Firms faced the strongest increase in input costs in eight years but were unable to transfer it on to customers as they tried to maintain their market share and stimulate new orders.

That along with a recent spike in oil prices – a key component of headline inflation – mean overall price pressures are likely to intensify, making it difficult for the Reserve Bank of India to remain so accommodative. — Reuters

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 46
Cxense type: free
User access status: 3

Next In Business News

FACTBOX-Grab, Southeast Asia's biggest startup, set for bumper U.S. listing
Malaysia launched Grab to go public in world's biggest US$40bil SPAC merger
Generali in talks to buy AXA assets in Malaysia
Oil rises after robust China data but J&J vaccine pause weighs
GLOBAL MARKETS-Global stocks hit record after U.S. inflation data
US consumer prices increased in March by most since 2012
Genting prices US$1bil senior unsecured notes
IMF offers rosier view on Asia, warns of Fed fallout on markets
MMHE bags SapuraOMV Jerun contract�
BIMB raises RM795.6mil via private placement

Stories You'll Enjoy