HSBC India Composite PMI Output Index fell marginally from 53.5 in February 2015 to 53.2 in March 2015
Business activity in the Indian private sector economy expanded for the eleventh consecutive month in March. Adjusted for seasonal influences, the headline HSBC India Composite PMI Output Index fell marginally from 53.5 in February 2015 to 53.2 in March 2015, indicating a marked rate of growth. Whereas manufacturing production expanded at an accelerated pace, services activity growth moderated.The seasonally adjusted HSBC India Services Business Activity Index posted 53.0 in March (February: 53.9). The latest reading was indicative of a mode rate rate of expansion that was slightly weaker than in the prior month. Anecdotal evidence highlighted sustained new business growth. Output rose in four of the six broad areas of the service economy, the exceptions being Financial Intermediation and Hotels & Restaurants.
March saw the level of new business placed with Indian services companies increase. Although solid, the rate of expansion eased since the prior month. Manufacturers, meanwhile, recorded a stronger increase in order book volumes. Across the private sector as a whole, incoming new work grew at a solid pace that as little-changed from that seen in February.
On a seasonally adjusted basis, service sector employment rose during March. This was an improvement from the broadly unchanged levels recorded in the prior month. In the manufacturing economy, staffing levels stabilized.
Amid sustained new business growth and delayed payment from clients, unfinished business held by Indian service providers rose in March. Despite being moderate, the pace of increase quickened since the previous month. Backlogs of work were also accumulated by manufacturers and, consequently, in the private sector overall.
Input prices faced by services firms rose further in March. The rate of cost inflation was solid and the strongest since June 2014. Increased petrol and transport prices were reported by panelists to have contributed to the overall rise in cost burdens. Higher input prices were also noted at manufacturers. Across the private sector, the rate of cost inflation reached an eight-month high.
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Average tariffs were raised further in March, with increases signalled by both manufacturers and service providers. According to survey respondents, output charges were raised in response to higher costs. Nonetheless, the rate of inflation was only slight and much weaker than that seen for costs. Service providers remained upbeat towards the prospects for business activity in 12 months' time. Over 25% of survey members anticipate output growth over the course of the next year, citing strengthening demand conditions.
Commenting on the India Services PMI survey, Pollyanna De Lima, Economist at Markit said: "India's service sector ended the first three months of 2015 with a strong performance, providing signals that much of the weakness seen in 2014 has been left behind. Despite softening slightly since the prior month, growth of activity and new business in the country's dominant sector was robust. These figures taken in conjunction with manufacturing mark a good quarter for businesses. The private sector labour market saw payroll numbers stabilise in March. Moreover, with unfinished business rising at a faster rate, companies will likely start hiring in coming months. Worryingly, however, cost inflationary pressures in the private sector as a whole firmed. Whereas output prices also increased, firms are still struggling to pass on the full extent of input price rises to clients amid fierce competition."
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