West Asia Tensions Hits Services Sector, Pushes To 14-month Low Of 57.5

New Delhi: The impact of the Middle East war in March hit India’s services activity, dragging down to a 14-month low of 57.5, but demand remained resilient, led by new export orders across the country. Indicating a loss of momentum in the sector, the cost pressures, however, rose sharply with firms reporting the fastest increase in input prices in nearly four years, a private survey showed on Monday.

As per the survey, the seasonally adjusted HSBC India services PMI business activity index fell from 58.1 in February to 57.5 in March, amid the weakest rises in new business and activity since January 2025. In the purchasing managers’ index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC said that India’s services sector stayed in expansion in March, but growth momentum eased for a second consecutive month. “Demand remained resilient, led by new export orders, which rose to the greatest extent since mid-2024. As such, service providers’ expectations for future activity remained positive,” Bhandari said.

However, the survey showed in a positive note that the services sector recorded quicker expansions in new export orders. Panellists noted gains from Africa, Asia, Australia, Europe, the Americas and the Middle East. But on the price front, the survey noted that selling charge inflation quickened to a seven-month high amid the steepest increase in input costs since June 2022.

According to panel members, it said, outlays on chicken, cooking oil, eggs, electricity, fish, fruits, fuel, labour, meat and vegetables all rose since February. “Input cost inflation accelerated to its fastest pace since 2022, indicating that higher fuel, transport and logistics costs are feeding into services,” Bhandari said.

Out of the four broad areas of the service economy, the survey said that the quickest increases in input costs and output charges were seen in consumer services and finance & insurance, respectively. “On employment front, the latest results showed a third consecutive monthly increase. Moreover, the pace of job creation was solid and the strongest since mid-2025 amid a pick-up in business confidence,” the survey said.

“Firms were at their most upbeat towards the outlook for output in close to 12 years. Optimism was pinned on hopes of an improvement in demand and market conditions. Advertising and better customer relations were also expected to bear fruit,” the survey added.