India's service sector growth slows in March

The combined output of India's service sector grew for the 11th straight month, albeit at a slower pace and has also come off the 17-month highs touched in February, according to a private survey done jointly by HSBC Holdings and Markit Economics. The HSBC Markit Business Activity Index fell to 58.1 in March from 60.9 in February, which was its highest since September 2008.

"As with the March manufacturing PMI, the main news here relates to the price balances," said Robert Prior-Wandesforde, senior Asian economist at HSBC. A separate HSBC Markit survey showed last week that activity in India's manufacturing sector had slowed in March, from a 20-month-record in February owing to rising cost pressures. "Although not as strong as those in manufacturing, input prices and prices charged in the service sector both increased in March, with the latter hitting a new high for the current upswing," Prior-Wandesforde said. "This further reinforces the message that underlying inflationary pressures continue to build in India and the RBI is behind the curve," he said.

The service index has been above 50, a level that separates expansion from contraction, for 11 months. Before that, it shrank for six months, hitting a trough of 40.3 in February 2009. The business expectations sub-index fell to 70.3 in March from a four-month-high of 73.1 in February.