Employment growth improves to fastest since March 2011: Nikkei

04 May 2018

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India’s service sector continued to improve at the start of the quarter, with business activity rising at a faster pace, supported by new order growth, Nikkei said in a research note. 

Reflecting improvements in demand conditions, job creation accelerated to the sharpest since March 2011, it said. Inflationary price pressures continued to ease further, with input and output charge inflation registering below their respective historical averages. 
The seasonally adjusted Nikkei India Services Business Activity Index rose from 50.3 to 51.4 in April. This signalled a faster expansion in output at Indian service firms than in the prior month. 
According to anecdotal evidence, greater inflows of new work helped to bolster activity. However, the latest upturn was modest and remained weaker than the series trend. April data pointed to higher order book volumes across India’s service sector. 
Although modest, the latest expansion accelerated from the preceding month. Favourable demand conditions were behind the latest rise, according to anecdotal evidence. Outstanding business at service companies continued to increase during April. Despite softening from the prior month, the pace of accumulation was solid. 
Reflective of improvements in demand conditions and greater output requirements, service companies raised their staffing levels during April. Furthermore, job creation was solid and accelerated to the strongest in over seven years. 
As has been the case since September 2016, cost burdens faced by the service sector rose in April. Respondents mainly linked higher raw material costs to increased prices for food and transport. 
However, inflation moderated for the second month in a row and was the weakest since August 2017. Real Estate & Business Services registered the sharpest rise in input costs. Meanwhile, output prices also rose at a modest pace in April. 
Moreover, output charge inflation was the slowest in 2018 so far. The pass through of higher cost burdens to clients led to higher output charges, according to panellists. Firms operating in the service sector remained confident towards the 12-month outlook for output in April. 
Expectations of further improvements in economic conditions was the key factor that supported confidence, with around 23% of the survey panel forecasting growth. However, the level of sentiment remained below the series trend. 

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