India service industry growth cools slightly in April

REUTERS - Growth in India's services industry slowed in April in line with a more modest rise in new business, a private survey showed on Wednesday.

The Nikkei/Markit Services Purchasing Managers' Index eased to 53.7 in April from 54.3, but chalked up its 10 straight month above the 50-level that separates growth from contraction.

"A softer expansion in activity, combined with unchanged employment and a dip in business expectations among service providers suggest that companies are not fully convinced about the recovery," said Pollyanna De Lima, economist at Markit.

The measurement of business expectations fell, but remained well in positive territory.

Growth in new orders - a proxy for domestic and foreign demand - cooled to 53.7 in April from 54.2, but remained solid.

A sister survey on Monday showed a rapid slowdown in growth in India's manufacturing sector, and taken together the surveys may increase calls for further monetary policy easing.

Reserve Bank of India Governor Raghuram Rajan cut rates by 25 basis points last month, taking the lending rate to a more than five-year-low of 6.5 percent, and kept the door open for more if inflation stays below its 5 percent target by March 2017.

Prices charged to customers were increased at a weaker pace in April but input costs rose faster. If firms decide to pass on the higher costs there may be little room for inflation to fall much below March's 4.83 percent.

The RBI is expected to cut the repo rate to 6.25 percent in the last three months of the year, a Reuters poll showed.

(Reporting by Shrutee Sarkar; Editing by Kim Coghill)