India’s Services Activity Hits 5-Month High in April Amid Strong Domestic Demand
The index is based on a single question asking how the level of business activity compares with the situation the month before.
New Delhi: With the start of the new fiscal year, India’s services activity grew in April after falling to a 14-month low in March. The reason behind this growth was attributed to the strong demand at home, but optimism about the year ahead fell on Middle East uncertainties, a private survey showed on Wednesday.
As per the survey, the seasonally adjusted HSBC India Services PMI business activity index rose to 58.8 in April from 57.5 in March, showing the strongest rate of expansion since last November. The index is based on a single question asking how the level of business activity compares with the situation the month before.
In the purchasing managers’ index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction. “The competitive pricing, e-commerce and particularly strong customer demand for relocation and logistic services boosted sales growth,” the survey said.
Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC said that India’s services PMI climbed to a five-month high of 58.8 in April. “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,” Bhandari said.
The survey, however, showed that international demand for Indian services lost strength. “Companies indicated that the war in the Middle East and subdued inbound tourism dampened the expansion,” the survey said.
Service companies, it said, reported another substantial increase in their operating expenses. “Despite slowing in April, the rate of inflation was one of the highest seen since November 2024. Monitored firms cited food (cooking oil, eggs, meat and vegetables), gas and labour costs, as well as gas shortage,” it said.
However, only part of this additional cost burden was transferred to customers, as signalled by an increase in selling prices. The overall rate of charge inflation receded to a three-month low. “Input cost inflation moderated but remained elevated, while output price inflation stayed subdued, indicating that some firms are absorbing higher costs rather than passing them on,” Bhandari said.
Going ahead, Indian services companies were confident of a rise in output over the course of the coming 12 months. “However, the level of positive sentiment nevertheless fell from March, dampened by worries surrounding the West Asia crisis and cost pressures," the survey said.
"On the job front, companies recruited more workers at the start of the first fiscal quarter. According to them, rising volumes of new business boosted the recruitment of short-term staff and junior-level trainees,” it added.
