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Nikkei India March Services PMI rises to 50.3

Nikkei India Composite PMI Output Index rose from 49.7 in February to 50.8 in March on the back of growth in both the manufacturing and service sectors.
The seasonally adjusted Nikkei India Services Business Activity Index fell from 47.8 in February to 50.3 in March. This signals that business activity stabilized at the end of the quarter, following the decline witnessed in February.

Where an increase was reported, firms commented on an improvement in market demand. Companies that saw reduced activity attributed this to intense competition.

The headline seasonally adjusted Nikkei India Composite PMI Output Index, meanwhile, rose from 49.7 in February to 50.8 in March on the back of growth in both the manufacturing and service sectors. The index was consistent with a marginal increase in overall output.

Following a modest contraction in February, Indian services activity stabilized in March, underpinned by greater inflows of new work. As business sentiment was at its strongest level since July, firms raised their staffing levels at the fastest pace since June 2011.

On the price front, input cost inflation was marked but softened from February’s three-month-high. Subsequently, output charge inflation eased to the weakest in 2018 so far.

March data points to a renewed increase in new business placed at Indian services companies in March. Enhanced marketing initiatives, and, in some instances, discounts were reported to have underpinned new client wins.

New businesses also rose across the manufacturing sector for the fifth, consecutive month in March. However, the rate of expansion moderated to its slowest in the current sequence, reflecting, in part, the weakest gain in new export orders since November.

Confidence, meanwhile, strengthened to its highest in the services sector since the implementation of the Goods and Services Tax (GST) last July. Forecasts of an improvement in demand conditions were cited as the key factor behind optimism.

Outstanding business in India’s services sector rose in March. Moreover, the rate of accumulation was marked and accelerated to its fastest since last October. According to panelists, outstanding work increased in tandem with greater volumes of new work and a lack of capacity.

India’s services sector firms also continued to face higher cost burdens during March. Despite softening from February’s three-month-high, input cost inflation was marked overall. Inputs such as fuel, food items, and gold were reported by panelists as prices increased over the survey period.

In the manufacturing sector, input cost inflation slowed from February’s recent peak but was marked overall.