Registering 58.5 in March, the seasonally adjusted HSBC India Services PMI Business Activity Index was comfortably above the neutral mark of 50.0 and indicated a sharp rate of expansion, stated a press release on Friday. Although below February's reading of 59, the headline index remained above its long-run average of 54.2.
Meanwhile, the HSBC India Composite PMI Output Index increased to a seven-month high of 59.5, from 58.8 in February, to signal another month of above-trend growth.
According to survey participants, output was supported by buoyant underlying demand and ongoing increases in new business. Sales rose at a softer pace than in February, but was still sharp.
At the sub-sector level, there was a broad-based increase in business activity and sales, with finance and insurance exhibiting the strongest growth trends, followed by consumer services. Underlying data indicated that the slowdown in growth of total new business reflected a weaker increase in international sales.
New orders from abroad rose at the softest pace in 15 months. Fierce competition and fading cost pressures suppressed charge inflation in March. Output prices rose at the weakest rate in three-and-a-half years. Heightened competition not only restricted price pressures, but it was also identified by panellists as the main challenge to output prospects. The level of positive sentiment slipped to a seven-month low and was below its long-run average.
Hiring activity across the service economy was pared back in March. Employment still rose at an above-trend pace, albeit one that was the weakest in close to a year. Several companies suggested that they had sufficient capacity for current requirements. Outstanding business volumes among Indian service providers rose only slightly in March.
Business expenses continued to increase in March, with panellists signalling higher food, freight, maintenance, medical equipment and vehicle spare part costs. The overall rate of inflation was solid, but eased to a five-month low.
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