By Anant Chandak
BENGALURU, May 3 (Reuters) - India's services activity
expanded at the fastest pace in nearly 13 years in April, driven
by robust demand, according to a private survey which also
showed price pressures increased at their fastest rate in recent
months.
Strong growth in services, which make up around 60% of
India's overall gross domestic product output, paints an
encouraging picture for the South Asian nation's economic
prospects, at least for the near term.
The S&P Global India services Purchasing Managers' Index jumped to 62.0 last month from 57.8 in March, its
highest since June 2010 and well above all forecasts in a
Reuters poll which had predicted a fall to 57.0.
It was above the 50-mark separating growth from contraction
for a 21st straight month, the longest stretch of expansion
since August 2011.
"India's service sector posted a remarkable performance in
April, with demand strength backing the strongest increases in
new business and output in just under 13 years," said Pollyanna
De Lima, economics associate director at S&P Global Market
Intelligence.
"Finance and Insurance was the brightest spot, topping the
sectoral growth rankings for both measures."
Along with robust domestic demand, international demand was
strong as the sub-index rose to a four-month peak and business
optimism hit its highest since December.
However, employment generation in the services industry only
saw a marginal uptick as most firms reported sufficient labour
capacities to meet rising demand.
Meanwhile, the input prices index was at a three-month high
from a 2-1/2-year low in March and firms raised their charges at
the fastest pace this year. The prices charged index rose to
53.5 from 52.4.
"Having retreated in each month since the start of the
current calendar year, input price inflation quickened in
April...Accommodative demand conditions facilitated the
pass-through of additional expenses to clients."
Rising price pressures, alongside an improving economic
outlook, mean the Reserve Bank of India will likely lean towards
keeping its key interest rate on hold rather than easing it
anytime soon.
The overall S&P Global India Composite PMI Output Index rose
to 61.6 in April, the highest since July 2010, as activity in
both manufacturing and services remained strong.
(Reporting by Anant Chandak
Editing by Shri Navaratnam)
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