The HSBC purchasing managers’ index (PMI) for services in India recorded a marginal rise from 52.3 points in March to 52.8 points in April, signalling a below-trend rate of expansion of services output.
As growth in manufacturing output declined for the third month in April, the HSBC Composite Output Index for April (covering manufacturing and services) remained unchanged at 53.8 points. Services and manufacturing account for the majority of India’s gross domestic product (GDP). The core sector’s two per cent growth in March had already indicated official industrial growth figures for the month would also be tamed.
However, new businesses in services were strong, though growing at a slower pace than in January and February. Respondents in the survey were more optimistic about the outlook over the coming year. The PMI is based on data compiled from monthly replies to questionnaires sent to about 350 private service sector companies.
The average input costs for service providers rose significantly in April, with the pace of inflation in line with the trend so far this year. Price pressures remained firm, as service providers passed on higher costs to clients through increased output charges. The rate of inflation was unchanged from that in the preceding month, the PMI report said, adding manufacturers saw output price inflation jump to the highest level in 13 months.
“Together with the April reading for manufacturing PMI, these numbers suggest inflation risks should remain a key concern for the RBI (Reserve Bank of India),” said Leif Eskesen, chief economist for India & Asean, HSBC.