India's Services PMI Expands At Fastest Rate Since June 2010

India's services activity and new business rose at the fastest rates since June 2010, according to a monthly survey.

The seasonally adjusted S&P Global India Services PMI Business Activity Index surged from 57.8 in March to 62 in April, its fastest expansion in output since mid-2010. A reading above 50 indicates expansion in business activity, while one below it signals contraction.

Anecdotal evidence linked the upturn in services to a pick-up in new business growth and favourable market conditions, the survey showed. Out of the four monitored sub-sectors, the strongest increase in output was seen in finance and insurance.

Mirroring the trend for business activity, new orders rose at the fastest pace since June 2010. Monitored companies signalled an improvement in international demand for Indian services in April. New export business expanded for the third month in succession and at the fastest pace over this period, the survey showed.

April data pointed to a substantial increase in output across the Indian private sector, amid quicker expansions at goods producers and service providers. The S&P Global India Composite PMI Output Index rose from 58.4 in March to 61.6 in April, its highest mark since July 2010. Likewise, there were faster increases in new business in both
the manufacturing and service sectors. Aggregate sales rose at the sharpest pace in nearly 13 years.

The pick-up in demand occurred in spite of escalating price pressures, according to the survey. Input costs rose at the quickest pace in three months during April, a pace that outpaced the long-run series trend. According to survey members, food, fuel, medicine, transportation, and wages were the main sources of inflation. Consumer services recorded the fastest upturn in average expenses. The combination of rising input costs and demand resilience urged service companies to raise their selling prices in April. The rate of charge inflation was marked and the strongest in 2023 so far.

Despite the substantial uptick in new orders, staff levels in the service sector increased only marginally at the start of the first fiscal quarter.

Marketing efforts, plans to price competitively, and an increased focus on customer relations boosted business confidence in April. Close to 22% of companies forecast growth in business activity over the course of the coming 12 months, compared with 2% that anticipate a reduction.

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