HSBC India Services PMI Business Activity Index Rises To 58.7 in April

The seasonally adjusted HSBC India Services PMI Business Activity Index reached 58.7 in April, up from 58.5 in March, indicating a sharp and stronger expansion in service sector output. The headline figure was above its long-run average of 54.2.

The overall expansion in output was fuelled by a significant rise in new business intakes, the joint best in eight months, with many firms noting favourable demand conditions and successful marketing efforts. In some instances, efficiency gains reportedly enabled companies to take on more work. Consistent with trends from the previous survey period, the finance & insurance sub-sector exhibited the highest growth rates for both output and new orders, stated the release.

Indian companies continued to benefit from improved international demand for their services, with Asia, Europe, the Middle East and the US particularly cited as sources of strength. Overall, new export orders expanded at the fastest pace since July 2024.

Indian services companies increased their workforce numbers for the thirty-fifth consecutive month in April. Moreover, the pace of job creation was marked and quicker than in March. Anecdotal evidence indicated that panellists enhanced operational capacity with full- and part-time employees to capitalise on increased client demand. Despite the rise in staffing levels, firms reported another monthly increase in unfinished work, with the rate of backlog accumulation accelerating from the previous month and outpacing its long-term average.

Input prices rose moderately and at the slowest pace for six months at the start of the fiscal 2025-26. Panellists noted greater chemical, cosmetic, fish, staff and transportation costs. They nevertheless reported lower vegetable prices.

Indian services firms increased their average selling prices during April, as they sought to transfer higher cost burdens to clients. The rate of charge inflation was solid, faster than in March and above its long-run average. Cost pressures were highest among consumer services companies, despite a slowdown since March, but it was in the finance & insurance segment that the fastest rate of charge inflation was registered.

Although service providers expressed optimism regarding activity growth, they downgraded expectations. The overall level of business confidence was at its lowest in close to two years.