Service activity eased slightly to 60.8 in April

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Despite easing to 60.8 in April from 61.2 in the previous month, India's service sector kept humming, recording one of the fastest growths in output in fourteen years, according to results of a private survey.

"India's service activity rose at a slightly softer pace in April, backed by a further rise in new orders, with a notable strength in domestic demand," said Pranjul Bhandari, chief India economist, HSBC.

The expansion in new orders was helped by a near-record upturn in services exports, the report noted, pointing to gains from several countries in Asia, Africa, Europe, the Americas and the Middle East.

India's service exports are likely to have risen to 4.4% in FY24 to $339.6 billion compared with the previous year.

Among the 400 firms surveyed across four service categories, finance and insurance recorded the steepest growth. The survey tracks consumer (excluding retail), transport, information and communication, finance and insurance, real estate and business services.

Employment remained a concern, as rate of job creation was marginal and lower than the previous month.

On the inflation front, a rise in input inflation owing to wage pressures and higher food prices translated into charge or selling price inflation as companies passed on costs.

"A backdrop of robust underlying demand enabled service providers to pass part of their additional cost burdens through to clients in the form of increased charges," the report noted.

The rate of selling price inflation eased from the seven-year high witnessed in March.

A favourable outlook for demand also boosted optimism, as business outlook rose to a three-month high.

Indian economy will likely grow faster than earlier projected, with the economic momentum carrying on from the previous fiscal according to international agencies and experts.