India’s Services Sector Records Strongest Growth in Nearly 14 Years: PMI Data
India’s services sector demonstrated robust growth in April, driven by strong domestic and international demand, which bolstered business confidence to a three-month peak, according to a survey released on Monday.
The HSBC Services Purchasing Managers’ Index (PMI) for India eased slightly to 60.8 in April from 61.2 in March, with the preliminary estimate pegged at 61.7. Despite this moderation, the index remained one of the fastest growth rates observed in nearly 14 years, as stated in a press release by the firm.
Since August 2021, the services sector has consistently maintained a level above the threshold of 50, indicating expansion rather than contraction.
Similarly, data tracking India’s manufacturing sector also showed a moderation in April, with a PMI reading of 58.8. This softening in both manufacturing and services contributed to an overall Composite PMI reading of 61.5 in April, down from March’s eight-month high of 61.8.
However, this reading still represented one of the highest levels observed in close to 14 years.
India’s services sector remains dominant, with positive market conditions and strong demand driving the new business sub-index to its highest level in three months and the third-highest level in nearly 14 years.
“India’s service activity expanded at a slightly slower pace in April, supported by a continued increase in new orders, particularly driven by robust domestic demand,” noted Pranjul Bhandari, Chief India Economist at HSBC.
Business activity in finance and insurance witnessed significant growth, as indicated by the survey.
Moreover, services companies experienced the second-fastest increase in new export business in nearly a ten-year period, with gains seen across Asia, Africa, Europe, the Americas, and the Middle East.
“Although new export orders remained strong, they moderated slightly compared to March,” Bhandari added.
Rising food prices and wage pressures resulted in increased cost burdens for survey respondents, prompting firms to pass on some of these costs to customers. The Consumer Services segment witnessed the sharpest increase in input costs, according to the survey.
“In response to growing new orders, firms expanded their staffing levels, although the pace of hiring growth decelerated. Input costs continued to rise sharply, albeit at a slower pace than in March, leading to squeezed margins for service firms, as only a portion of the cost increase was transferred to clients through output charges,” Bhandari explained.