Service sector growth slows in March: HSBC

Service sector growth slows in March: HSBC

Mumbai: Business activity among Indian services companies grew at a slower pace in March, moving away from 17-month highs touched in February, due to a slowdown in new work and employment and rising costs, a survey showed.

The HSBC Markit Business Activity Index, based on a survey of 400 firms, fell to 58.1 in March from 60.9 in February, which was its highest since September 2008.

“As with the March manufacturing PMI, the main news here relates to the price balances," said Robert Prior-Wandesforde, senior Asian economist at HSBC.

Manufacturing growth had slowed down in March, dropping from a 20-month-record in February, as mounting cost pressures weighed on expansion in output, a HSBC Markit survey showed last week.

“Although not as strong as those in manufacturing, input prices and prices charged in the service sector both increased in March, with the latter hitting a new high for the current upswing," Prior-Wandesforde said.

“This further reinforces the message that underlying inflationary pressures continue to build in India and the RBI is behind the curve," he said, referring to the Reserve Bank of India.

The central bank raised rates last month, ahead of its regular 20 April policy review and is expected to act again this month to cool mounting inflationary pressures. The index has been above the 50 point level that separates expansion from contraction for 11 months as the economy shakes off the impact of the global slowdown. Before that, it shrank for six months, hitting a trough of 40.3 in February 2009.

The business expectations sub-index fell to 70.3 in March from a 4-month-high of 73.1 in February.