Key Points
- New business inflows expanded at the fastest pace in five months
- Export orders moderated amid Middle East conflict, shifting demand to domestic consumers
- Input price inflation eased but firms largely absorbed costs, limiting price hikes
New Delhi, May 6. India’s services sector activity strengthened in April, with the Purchasing Managers' Index (PMI) rising to a five-month high of 58.8, because of robust domestic demand and increased business activity, the HSBC India Services PMI data showed on Wednesday.
The seasonally adjusted HSBC India Services PMI Business Activity Index rose from 57.5 in March to 58.8 in April, which is the strongest pace of expansion since November.
Moreover, new business inflows also grew at the fastest pace in five months, supported by competitive pricing, e-commerce activity and strong demand for relocation and logistics services, according to survey participants.
"Activity and new orders strengthened, even as new export orders eased, suggesting that demand is rotating from overseas markets to domestic consumers amid the Middle East conflict," said Pranjul Bhandari, Chief India Economist at HSBC.
Domestic Demand Drives Strongest Service Sector Growth Since November
On the cost front, input price inflation eased slightly from March.
Despite elevated cost pressures, output price inflation remained relatively subdued, indicating that some firms absorbed higher costs rather than passing them on to customers.
However, service providers remained optimistic about the year ahead, supported by expectations of stronger demand, marketing initiatives and rising client enquiries, although sentiment softened slightly due to concerns over geopolitical tensions and cost pressures.
Input Costs Ease Slightly, Firms Hold Back on Raising Prices
Meanwhile, hiring activity picked up across the sector, with companies adding both short-term staff and junior-level workers to meet rising demand. Increased recruitment also helped firms reduce outstanding business volumes marginally during the month.
At the broader level, India’s private sector activity also gained momentum in April, with the HSBC Composite PMI Output Index rising to 58.2 from 57 in March.
Notably, India’s manufacturing PMI increased to 54.7 in April, up from 53.9 in March, as output, new orders (including exports) and employment all grew moderately.
–IANS
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