Services PMI Falls: April 2017

India's services sector expanded at the slowest pace in three months in April, indicating that the economy may not have recovered to the extent expected earlier.

The Nikkei India Services Purchasing Manager's Index slipped to 50.2 from 51.5 in the previous month, with a marginal expansion in employment and new business.

A reading of over 50 on the index indicates overall expansion in economic activity while that below the benchmark denotes contraction.

The latest results indicate that the road to recovery from the government's decision, in November last year, to withdraw high-value currency notes as legal tender, is still bumpy and a reminder that the sector is not out of the woods yet.

The Composite PMI Output Index was down to 51.3 in April from 52.3 in March.

Companies remained cautiously optimistic towards future performance, with 18% of survey participants anticipating lower activity in the year ahead compared with 21% that foresee expansion.

Indian service providers responded to the sustained rise in new business by recruiting additional workers. However, the rate of job creation went down and was below the long run survey average. The manufacturing employment also increased at a slower pace.

The Nikkei India Manufacturing PMI for manufacturing performance during April matched the index reading of 52.5 reported in the previous month.

The report said that the quantity of raw materials and semi-finished goods purchased by Indian manufacturers rose in April, in line with the trend recorded throughout the past four months.

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