India’s services sector growth continued to recover in March as lockdown measures were lifted. Companies registered faster expansion in sales and activity in 2022, but business confidence remained subdued due to inflation concerns.
The S&P Global India Services PMI Business Activity Index rose to 53.6 in March 2022 from 51.8 in February 2022.
Input costs rose sharply in 11 years at the end of financial year 2022, but most companies absorbed the additional costs and raised their charges only moderately. Service providers surveyed said that there was an increase in their operating expenses aided by higher chemical, fuel, raw material, retail, transportation and vegetable prices.
“The war in Ukraine exacerbated lingering issues in supply chains, triggering a acceleration in inflation across the Indian service economy,” said Pollyanna De Lima, Economics Associate Director at S&P Global. “Sales were somewhat supported by only mild adjustments to output charges, however, with consumers likely to face soaring prices in the coming months as rising cost burdens feed through to services charges,” she added.
New projects continued to be added in March on the back of increased client visits, successful marketing and supportive demand conditions. However, the latest data pointed to a further decline in service sector jobs, but there was a slowdown in the rate of contraction.
Among the services sector, Finance & Insurance was the best-performing category in March, with this segment seeing the best trends for sales and output. Real Estate & Business Services was the weakest link, posting marked and accelerated declines in new business as well as activity. Meanwhile, Consumer Services recorded the strongest increase in input costs, while Transport, Information & Communication registered the sharpest rate of charge inflation.