India’s purchasing managers’ index for the sector fell to 54.6 in March from 55.3 in February
Firms that noted a higher output linked the upturn to polls, rising sales, and improved demand
NEW DELHI :
ndia’s services activity softened in March amid rising cases of coronavirus infections and falling footfalls, though ongoing state elections kept services demand elevated, results of a private survey showed.
Data analytics firm IHS Markit on Wednesday said India’s purchasing managers’ index (PMI) for services fell to 54.6 in March from 55.3 in February, registering a slower but still marked pace of expansion. A reading below 50 is considered contraction while that above 50 signifies expansion.
“Companies that noted higher output linked the upturn to the elections, rising sales, and improved demand. Meanwhile, some firms mentioned that low footfall, consumer uncertainty, and the covid-19 crisis led to a reduction in activity at their units," IHS Markit said.
The escalation of the pandemic and the return of restrictions could cause a notable slowdown in growth during April, said Pollyanna De Lima, economics associate director at IHS Markit.
“Service providers hope for an improvement in vaccine availability, which would curb the spread of the disease and support the economy. Optimism towards the year-ahead outlook for business activity was sustained, but the overall level of confidence was unchanged from February and remained below its long-run average," she said.
Survey participants reported a sharp increase in input costs, the second-fastest since February 2013. However, selling prices rose only fractionally as a vast majority of companies left their fees unchanged because of competitive pressures.
“A few firms lifted their selling prices amid efforts to protect margins given the ongoing increases in input costs. At the same time, the vast majority of companies left their fees unchanged due to competitive pressures. As a result, there was only a fractional rise in average output charges," the analytics firm said.
Services companies posted a decline in payroll numbers during March for the fourth consecutive month. Job shedding occurred despite a further increase in outstanding business at services firms though external demand for Indian services continued to worsen with new foreign orders decreasing for the 13th straight month.
Data released on Monday showed PMI manufacturing also fell to a seven-month low in March because of cost pressures, even as a surge in covid-19 infections posed new challenges for businesses.
The International Monetary Fund on Tuesday raised its FY22 growth forecast for India to 12.5%, but cautioned that the projection has not factored in the second wave of the pandemic and that the economic outlook of Asia’s third largest economy faces severe downside risk. The Reserve Bank of India governor Shaktikanta Das on Wednesday said an economic recovery may get delayed because of localized lockdowns across the country, while keeping the central bank’s growth projection for FY22 unchanged at 10.5%.