Services sector activity reported seven-month low performance in April

Service Sector

Country’s services sector output growth reported a seven-month low performance in April due to softer rise in new business and disruptions caused by the ongoing Lok Sabha elections, revealed Nikkei India Services Business Activity Index.

However, there are predictions that the economic conditions of the country will improve after the elections with a stronger upturn in employment.

Pointing to the weakest upturn in output since last September, the seasonally adjusted Nikkei India Services Business Activity Index, that maps both the manufacturing and services industry, has shown that it has declined from 52.7 in March to 51.7 at the start of the FY 2019.

However, the services purchasing managers’ index (PMI) showed the expansion territory for the eleventh straight month.

In PMI parlance, a print below 50 means contraction, while a score above 50 means expansion.

The author of the report Pollyanna De Lima, Principal Economist said, “Although the Indian private sector economy looks to be settling into a weaker growth phase, much of the slowdown was linked to disruptions arising from the elections and companies generally foresee improvements once a government is formed”.

The only reason for the slowdown cannot be the general elections, Lima said, adding that in the service sector, competitive conditions and a shift towards online bookings among customers has reportedly restricted new business gains and in turn growth of activity.

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