Nikkei India Services PMI drops to 7-month low

By BLOOMBERG

MUMBAI • Expansion in India’s dominant services sector weakened in April ahead of an election, a private survey showed yesterday, suggesting a delayed recovery to Asia’s third-largest economy.

The Nikkei India Services Purchasing Managers’ Index (PMI) fell to a seven-month low of 51 in April from 52 in the previous month, on the back of slower increases in new business and output growth. A survey last week showed manufacturing also weakened in April.

“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,” said Pollyanna De Lima, principal economist at IHS Markit and author of the report.

India’s seven-phase election started in April and will conclude on May 19, with results due on May 23.

The PMI survey showed input costs and output charges remained weak by historical standards, helping to keep inflation anchored well below the central bank’s 4% medium-term target. The Reserve Bank of India cut its benchmark rate twice this year.

Kotak Institutional Equities Research yesterday cut its growth forecast for the financial year to March 2020 to 6.8% from 7.1%, citing prospects of a weak monsoon season, subdued rural demand and reduced space for government expenditure. — Bloomberg