HSBC services PMI improves in April, but remains below the water line

India Infoline News Service | Mumbai |

The slight uptick in inflation readings suggests that inflation pressures are still lingering, which calls for the RBI to continue its starring contest with inflation

April data indicated that business activity across the Indian private sector fell again. The seasonally adjusted HSBC India Composite Output Index rose from 48.9 in March to 49.5.
Despite being consistent with a marginal rate of reduction, this was the second consecutive sub-50.0 reading recorded. Manufacturing production increased at a softer rate in April, whereas service sector output decreased further.
Up from 47.5 in March to 48.5 in April, the headline HSBC Business Activity Index adjusted for seasonal factors indicated a slower contraction of output in the Indian service sector. Nevertheless, the latest reduction was the tenth in as many months. According to survey participants, a difficult economic climate, combined with the elections and a further drop in new orders had all contributed to the latest fall in business activity. Output decreased in two of the six monitored service categories, these being Financial Intermediation and Transport & Storage.
Incoming new work at service providers dropped at a softer rate in April, and one that was modest overall. Panellists reporting lower new business linked this to weaker demand and the elections. Conversely, new orders received by manufacturers increased. Private sector companies registered lower new business for the second month running, although the rate of reduction eased to a marginal pace.
Indian services companies indicated that payroll numbers fell in April, amid evidence of lower new business inflows. Despite being fractional, the latest drop in staffing levels ended a four-month sequence of job creation. Workforce numbers in the private sector as a whole were broadly unchanged.
Input prices faced by Indian services firms continued to rise in April, with panellists reporting higher prices paid for food, packaging materials, fuel and paper. Although solid, the rate of inflation was weaker than the series long-run average. Input price inflation in the manufacturing economy moderated. Subsequently, the rise in input costs across the private sector as a whole softened to the slowest since last June.
Output charge inflation at service providers accelerated to the strongest in five months during April, as companies attempted to protect margins amid increased cost burdens. That said, the index measuring output prices registered below its long-run trend.
Average tariffs across the private sector as a whole also rose, with inflation being the strongest in five months.
Input prices faced by Indian services firms continued to rise in April, with panellists reporting higher prices paid for food, packaging materials, fuel and paper. Although solid, the rate of inflation was weaker than the series long-run average. Input price inflation in the manufacturing economy moderated. Subsequently, the rise in input costs across the private sector as a whole softened to the slowest since last June.
Output charge inflation at service providers accelerated to the strongest in five months during April, as companies attempted to protect margins amid increased cost burdens. That said, the index measuring output prices registered below its long-run trend.
Average tariffs across the private sector as a whole also rose, with inflation being the strongest in five months.
Leif Eskesen, Chief Economist for India & ASEAN at HSBC said: “While the Business Activity Index improved, it remained below the water line. This points to still subdued service sector activity. Meanwhile, the slight uptick in inflation readings suggests that inflation pressures are still lingering, which calls for the RBI to continue its starring contest with inflation."
 

Advertisements

  • Save upto Rs.2.67 lakh with Pradhan Mantri Awas Yojana ...Know more
  • Now Save Rs.3150 on your Demat Account ...Click here
  • Now get IIFL Personal Loan in just 8* hours...APPLY NOW!
  • Get the most detailed result analysis on the web - Real Fast!
  • Actionable & Award-Winning Research on 500 Listed Indian Companies.