Growth in India's services sector picked up pace in March on the back of a strong increase in demand, matching the strong performance of the manufacturing sector.
The seasonally adjusted Nikkei India Services Business Activity Index climbed to 54.3 in March from 51.4 in February, matching January's 19 month high. A reading above 50 on this survey-based index indicates expansion. On Monday, the same organisation's survey had shown an uptick in manufacturing business conditions, with the manufacturing PMI recording its eight-month high of 52.4.
The combined reading, captured through the Nikkei India Composite PMI Output Index, climbed to a 37-month high of 54.3 from 51.2 in February, suggesting a strong recovery in business activity in the last month of the financial year.
Some of the other indicators have also looked up of late. Most auto companies reported strong sales in March while core sector growth rebounded to a 15-month high of 5.7% in February.
The survey said that incoming new work in the Indian private sector economy rose for the ninth month running and at the fastest pace in over three years. Stronger increases were noted in both the manufacturing and services sectors, which companies associated with an improved demand environment.
Indian services companies remained optimistic that activity will increase further over the coming 12 months.The level of confidence was at a nine month high, with positivity linked to favourable government policies and forecasts of a pick-up in demand.
Sub-sector data indicated that activity rose in five of the six monitored categories--hotels and restaurants, post and telecommunications, financial intermediation, renting and business activities, and other services--except transport and storage.