HSBC India Services PMI eases in March to 53 from 53.90 in Feb

Growth in the country's services sector slowed in March, with the HSBC India Services Purchasing Managers' Index (PMI) easing to 53 from 53.90 in February.

The services sector contributes more than half of India's GDP. Growth in the services sector is considered as an indicator for the country's overall economic progress.

"India's service sector ended the first three months of 2015 with a strong performance, providing signals that much of the weakness seen in 2014 has been left behind. Despite softening slightly since the prior month, growth of activity and new business in the country's dominant sector was robust," said Pollyanna De Lima, economist at Markit.

March saw the level of new business placed with Indian services companies increase. But the rate of expansion was less than in the previous month.

New work intakes expanded in four of the six surveyed sub-sectors, apart from financial intermediation and hotels and restaurants, as per the survey. Manufacturing, meanwhile, recorded a stronger growth as compared to Services. HSBC India Manufacturing PMI increased in March to 52.10 from 51.20 in February.

The services sector employment has shown a marginal increase, which was mostly stagnant in the last few months till February.

According to the survey, weak increases in employment levels were seen in five of the six broad areas of the service economy. Transport and storage firms indicated job shedding. The survey indicated an increase in the input cost for services providers across India in March as compared to previous month in all six monitored categories, led by hotels and restaurants.

Service providers are optimistic towards the prospects for business activity in coming 12 months. More than 25 per cent of survey participants foresee output growth over the course of the next year, due to strengthening demand conditions.

The HSBC India Services PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in around 350 private service sector companies. The index tracks variables such as sales, employment, inventories and prices. The survey covers hotels and restaurants, transport and storage, financial intermediation, renting and business activities, post and telecommunication, and other services.