- Firms became more optimistic toward future business activity
- Finance and insurance sectors see strong demand for services
According to Bloomberg article published on May 3, 2023, India’s services activity accelerated at the quickest pace in almost 13 years in April, signaling that stronger demand for everything from technology to finance will keep Asia’s third-largest economy firmly on the path to world-beating growth.
The S&P Global India services purchasing managers’ index rose to 62 last month, the strongest level since June 2010, according to a statement Wednesday. The gauge was at 57.8 in March.
A reading above 50 indicates expansion in activity, while a number below that denotes contraction.
The strength in services sector that contributes to more than 50% of gross domestic product shows the economy is in relatively good shape unlike some manufacturing-reliant economies that have seen factory activity disappoint amid a darkening global trade outlook. India’s services sector momentum is key to creating jobs and bolstering economic growth, which the International Monetary Fund has pegged at a world-beating 5.9% in the year started April.
“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 of S&P Global Market Intelligence. Finance and insurance was the brightest spot, topping the sectoral growth rankings for both measures, Lima said.
The pick-up in demand occurred despite escalating price pressures. Input costs rose at the quickest pace in three months during April, the survey showed, with food, fuel, medicine, transportation and wages seen as the main sources of price rise.
The survey also highlighted that firms remained optimistic toward future business activity, but job creation remained negligible. “One area of weakness highlighted in the latest results was the labor market,” Lima said.
A survey of factory managers earlier in the week showed momentum in India’s factory activity, with the S&P Global India manufacturing PMI rising to a four-month high of 57.2 in April from 56.4 in March. That, together with the services sector performance, helped lift the S&P Global India composite index reading to 61.6 last month from 58.4 in March.
