Services activity at 5-month high in April despite inflation woes

BENGALURU: Activity in India’s dominant services sector grew at its fastest pace in five months in April on strong demand, prompting firms to add jobs for the first time since November, a private survey showed, but sky-rocketing inflation remained a major concern.

The S&P Global India Services Purchasing Managers’ Index rose to 57.9 in April from 53.6 in March, its highest since November and surpassing the 54.0 estimate in a poll.

While the index remained above the 50-mark separating growth from contraction for a ninth straight month, it was the best start to a fiscal year for the sector since 2011/12.

“In isolation, the PMI data for the service sector were mostly encouraging, as surging demand underpinned quicker increases in new business inflows and output,” noted Pollyanna De Lima, economics associate director at S&P Global.

“Consumer services and finance and insurance were the top-performing areas of the service economy, while real estate and business services was the only sub-sector to post contractions in sales and output.”

Although a sub-index tracking new business rose to a five-month high in April, aided by the easing of COVID-19 restrictions, new export business contracted at the quickest rate in seven months as concerns over the Russia-Ukraine war and a slowdown in China have dragged on global economic activity.

Still, firms were encouraged to increase staffing for the first time in five months, albeit at a marginal rate. That kind of weak growth is unlikely to boost the employment situation significantly.

Meanwhile, like most parts of the globe, Asia’s third-largest economy is feeling burnt by surging inflation, which accelerated to a 17-month high in March.