PMI: Services sector activity reached 5-month high in April, good news on employment front

PMI: There has been an improvement in the activities of the service sector due to the boom in business activities and there is a renewed increase in employment. Due to this, in the month of April, it has reached the highest level of five months. The seasonally adjusted S&P Global India Services PMI business activity index rose to 57.9 in April. It stood at 53.6 in March, showing the fastest rate of expansion since November despite rising price pressure. This is the ninth consecutive month that the service sector has witnessed an expansion in production.

Signs of bullish movement above 50

The Purchasing Managers’ Index (PMI) above 50 indicates an increase in activity, while a drop below 50 indicates a decline. Paulina Di Lima, S&P Global’s associate director of economics, said while the PMI numbers for the services sector are mostly encouraging, new business flows and production were boosted by increased demand. The survey said that despite the construction cost reaching record high levels, the growth momentum in the Indian services sector has remained steady. Selling prices have risen at the fastest rate since July 2017 and concerns over rising inflation are weighing on business confidence.

skyrocketing inflation affected

Service providers say they have to pay more for food, fuel and raw materials, Lima said, with some saying rising wage costs have also increased overall spending. The overall rate of inflation is at the second highest level since the start of the survey, forcing companies to increase selling prices. The survey said that due to the lifting of the restrictions of Kovid-19, the number of consumers has increased and thus the demand has also increased significantly. On the employment front, companies continued to recruit in April and employment increased for the first time since November. Companies that hired additional personnel said this was because of the continued growth in new business. Meanwhile, the overall PMI production index rose to 57.6 in April from 54.3 in March, marking the fastest growth in the past five months.