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Last updated: 05 May, 2017  

Up.Down.Arrow.9.Thmb.jpg Services sector hit by challenging market conditions in April

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SME Times News Bureau | 05 May, 2017
Country's services sector continued to expand in April but at a slower pace due to challenging market conditions and the after effects of the demonetisation measure, a key macro-economic data revealed on Thursday.

The Nikkei India Services Purchasing Managers' Index (PMI) stood at 50.2 in April, down from 51.5 in March and compared to 50.3 in February.

An index reading of above 50 indicates an overall increase, while below 50 an overall decrease.

"April PMI data for the Indian service sector show how jittery the current economic environment is, igniting concerns among some businesses, despite remaining in growth territory," said Pollyanna De Lima, economist at IHS Markit and author of the report.

"The latest results indicate that the road to recovery from the notes ban is still bumpy and is a reminder that the sector is not out of the woods yet."

The report pointed out that the services sector's expansion was supported by ongoing growth of new work and additional hiring over the month.

"However, in all three cases, the rates of increase weakened. On the price front, average input cost inflation slowed from March's nine-month high amid reports of lower fuel prices partly offsetting higher transport costs arising from lorry strikes," the report said.

"Conversely, the rate of charge inflation accelerated."

According to the report, advertising campaigns reportedly supported the increase in "services new work".

"There was, however, evidence that growth was stymied by competitive pressures," the report pointed out.

"The rate of expansion in new business was only marginal overall, having softened from that registered in March. In contrast, order books at goods producers rose to the greatest extent in six months."

The report revealed that service providers raised their own output charges (on average) in April.

"Selling prices have now increased for three months in a row. The rate of inflation remained slight and below its long-run average, despite accelerating since March. Factory gate charges also rose, but inflation was at a three month low," the report said.

Besides, the seasonally adjusted Nikkei India Composite PMI Output Index also slowed during the month under review to 51.3, from 52.3 in March.

"With the strength of the upturn in manufacturing production also losing pace, growth of private sector activity softened since March," the report disclosed.
 
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