India’s services sector saw a boost in April, as the Purchasing Managers’ Index (PMI) reached a five-month high of 58.8. This increase was driven by strong domestic demand and heightened business activity, according to the HSBC India Services PMI data released on Wednesday.
The HSBC India Services PMI Business Activity Index climbed from 57.5 in March to 58.8 in April, marking the most robust expansion since November. Additionally, new business inflows experienced their fastest growth in five months, attributed to competitive pricing, e-commerce operations, and a solid demand for relocation and logistics services as reported by survey participants.
Pranjul Bhandari, Chief India Economist at HSBC, noted that while new export orders slightly decreased, overall activity and new orders strengthened. This shift indicates a transition of demand from international markets to domestic consumers amidst the Middle East conflict.
On the cost front, there was a slight easing in input price inflation compared to March. Despite facing elevated cost pressures, service providers maintained relatively subdued output price inflation, suggesting that some absorbed the increased costs rather than passing them on to customers.
Companies in the sector expressed optimism for the future, driven by expectations of increased demand, marketing efforts, and a rise in client inquiries. However, sentiment slightly softened due to concerns over geopolitical tensions and cost pressures.
Hiring activity across the sector intensified, with firms recruiting short-term staff and junior-level workers to meet the growing demand. This increased recruitment also aided in marginally reducing outstanding business volumes during the month.
At a broader level, India’s private sector activity gained momentum in April, with the HSBC Composite PMI Output Index rising to 58.2 from 57 in March. Notably, India’s manufacturing PMI also saw an uptick to 54.7 in April, up from 53.9 in March, with moderate growth in output, new orders (including exports), and employment.
