Service sector activity slips to 7-month low in April, well below 2018 average

India's service sector activity slipped to a seven-month low in April as businesses waited for the outcome of general elections taking place, Nikkei Asian Review said on Monday. The Nikkei India services Purchasing Managers' index (PMI) dropped to 51 in April from 52 in March. The reading came in below the average for 2018 which was 51.6 and underscored that the sector is losing momentum.

Readings above 50 points indicate expansion, while those below 50 signal contraction. "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," said Pollyanna De Lima, an economist at IHS Markit, which compiles the survey.

Companies generally foresee improvements once a government is formed, she said. "Another key takeaway from the latest results is the lack of inflationary pressures in both the manufacturing and service sectors, which coupled with slower economic growth offers room for a further cut to the benchmark repurchase rate," said De Lima.

With the growth of manufacturing production also softening to a seven-month low, the seasonally adjusted Nikkei India Composite PMI Output Index fell from 52.7 in March to 51.7 in April. The latest figure was indicative of a slight pace of expansion in an aggregate activity that was weaker than seen on average over the series history. 

(With inputs from agencies.)