BENGALURU, April 5 (Reuters) - Growth in India's
dominant services industry eased last month from February's
12-year high due to a softer expansion in demand, according to a
private survey, which also showed input cost inflation falling
to its lowest since September 2020.
The S&P Global India services Purchasing Managers' Index fell to 57.8 last month from 59.4 in February,
lower than a Reuters poll forecast of 58.3.
But it stayed above the 50-mark separating growth from
contraction for a 20th consecutive month.
"India's service sector built on to the momentum gained in
February with further increases in new business intakes and
output...However, manufacturing has retaken the mantle as the
main driver of growth," said Pollyanna De Lima, economics
associate director at S&P Global Market Intelligence.
Manufacturing activity expanded at the fastest pace in
three months during March, a separate survey released earlier
this week showed, but the slowdown in services growth pulled a
composite index down to 58.4 from 59.0 in February.
A sub-index tracking new business inflows in the services
industry declined to 58.1 from 59.5 in February and firms hired
at the slowest pace in 10 months, citing adequate capacity.
Future business expectations slipped to their lowest in
eight months.
"Weakness was seen with regards to jobs...as a general lack
of pressure on operating capacities and diminished confidence
towards growth prospects prevented hiring activity," De Lima
said.
The softer outlook came despite input cost pressures easing
to levels not seen in 2-1/2 years and better growth in foreign
demand.
But service providers were able to pass on some of their
additional cost burdens to clients thanks to resilient domestic
demand, which in turn increased the pace of prices charged to
their quickest in three months.
That suggested persistent price pressure. Overall inflation
eased slightly to 6.44% in February, but remained above the
Reserve Bank of India's (RBI) 2%-6% target range.
Inflation is unlikely to return to the RBI's 4.0%
medium-term target any time soon, putting further pressure on
the central bank, which is expected to hike its key repo rate by
25 basis points on Thursday.
(Reporting by Anant Chandak
Editing by Shri Navaratnam)
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