Services, manufacturing sectors propel India’s economic activity | Daily Current Affairs 2021

Services, manufacturing sectors propel India’s economic activity

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serviceServices and manufacturing sector expansion propelled overall economic activity in India during March, a key macro data showed.

The Nikkei India composite PMI (purchasing managers’ index), a key macro data that indicates monthly trends in overall economic activity, showed rise at 54.3 in March from 51.2 in February.

An index reading of above 50 indicates an overall increase in economic activity, while below 50 an overall decrease.

The composite PMI weighs the average of the manufacturing output index and the services business activity index. It is based on original survey data collected from around 700 companies spread across sectors in India.

According to the composite PMI report published by leading global diversified provider of financial information services — Markit, the expansion in March was the highest in the last 37 months.

The survey disclosed that growth had accelerated for both the sectors, supported by marked increase in new business inflows, as well as the demand conditions.

“March PMI surveys signalled a reassuringly robust end to the financial year for the Indian economy, with sharper increases in new business spurring activity growth in both the manufacturing and service sectors,” said Pollyanna De Lima, economist with Markit.

On a standalone basis, the Nikkei India manufacturing PMI during March rose to an eight-month high of 52.4 from 51.1 in February.

The Nikkei services business activity index for March was the joint highest since June 2014. It stood at 54.3 from February’s 51.4.

The services index noted growth in five out of the six surveyed categories, with the exception being transport and storage segment.

Notwithstanding the rise in output, the trend in service sector employment levels remained subdued.

“With the sole exception of the mild increase in hiring seen among service providers during last July, the two surveys collectively have signalled a broadly stagnant labour market for the past two years,” De Lima said.

In addition, services input costs increased on an average as a result of a modest rate of inflation that was seen in March.

Besides, purchase price inflation among goods’ producers was at a three-month high.

“Input costs across the private sector meanwhile rose at the quickest rate in three months and charge inflation likewise accelerated, suggesting that headline inflation may pick-up in coming months. That said, increases in prices remained relatively modest,” De Lima added.

The survey pointed out that the manufacturing companies raised their tariff charges moderately in March after having offered discounts during the prior month.

The survey cited that the services business sentiment remained positive for the upcoming 12-month, with hopes of further increase over the coming months.

Favourable government policies and forecasts of an increase in demand restored the level of confidence, the report added.

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