Markit Economics, which compiles the PMI data, said services activities expanded in March, though at a slightly lower rate than in February. Output rose in all segments except financial intermediation and hotels & restaurants, it added.
March saw an increase in the level of new business placed with Indian services companies. Though solid, the rate of expansion in this was lower than the previous month.
Markit economist Pollyanna De Lima said: “India’s service sector ended the first three months of 2015 with a strong performance, providing signals that much of the weakness seen in 2014 had been left behind. Despite softening slightly since the previous month, growth of activity and new business in the country’s dominant sector was robust.”
Earlier, manufacturing PMI data for March had shown a rise over February — to 52.1 from 51.2.
The composite indicator — a combination of PMI numbers for manufacturing and services — saw a marginal decline to 53.2 in March from 53.5 in February.
Amid sustained new business growth and delayed payment from clients, unfinished business held by Indian service providers rose in March. Despite being moderate, the pace of increase was higher when compared with the previous month.
Input prices faced by services firms rose further in March. The rate of cost inflation was solid and the strongest since June 2014. Panelists reported increased petrol and transport prices to have contributed to the overall rise in the cost burden.
Similarly, output charges were raised in response to higher costs. Nonetheless, the rate of inflation on the output side was only slight and much weaker than that seen for costs.
“Worryingly, however, inflationary pressures on the cost side in the private sector as a whole firmed. Whereas output prices also increased, firms are still struggling to pass on the full extent of input price rises to clients amid fierce competition,” De Lima said.