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India’s services sector kicked off the new financial year with a positive note, with April’s PMI rising to 58.7 from 58.5 against the previous month, as per HSBC Services PMI data released by S&P Global
Business growth in the sector was driven by stronger demand and a sharp rise in new orders in April, after a brief spell of slowdown in March.
Highlights from the report:
- A strong rise in new business orders, the highest in eight months, fuelled the overall output growth. Companies credited this to supportive market conditions, successful marketing efforts, and improved efficiency, which enabled them to handle greater workloads. However, unfinished workloads also continued to climb at a rate surpassing the long-term average.
- To accommodate rising orders, hiring picked up speed from March, with firms expanding their workforce by adding both full-time and part-time positions to boost operational capacity.The finance and insurance sector led in both output and new orders, despite experiencing the fastest rise in charges.
- New export orders grew at their fastest rate since July 2024, thanks to a surge in international demand, especially from the US, Asia, Europe, and the Middle East, bringing a boost to Indian service providers.
- At the start of FY26, input prices increased moderately, the slowest in six months. Higher costs were noted for chemicals, cosmetics, fish, staff, and transportation, while vegetable prices fell.
- Services firms raised their average selling prices to pass on higher costs to clients. The rate of price inflation was strong, surpassing March’s pace and the long-term average. Consumer services companies took the major hit, although cost pressures eased slightly from March. However, even after the growth in activity and improved margins, optimism among service providers slipped to its lowest level in nearly two years.
Pranjul Bhandari, chief India economist at HSBC, said, “India services activity rose at a faster pace than last month. New export orders gained momentum after taking a breather in March, accelerating at its fastest pace since July 2024.”
He further added that margins increased as cost pressures eased and prices charged rose at a faster rate.
The private sector also saw a modest improvement, with the composite PMI rising to 59.7 in April from 59.5 in March, the strongest rate of expansion since August 2024. Both goods producers and service providers saw a rise in new export orders, pushing overall business activity higher.
“Though firms remained optimistic about future growth, their confidence waned slightly,” he said, noting that though strong demand and productivity improvements kept them hopeful, concerns about market competition weakened the outlook.
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