Boost in exports helps services PMI inch up in April

India’s services activity inched higher in April as new export orders gained momentum, a private survey showed this week.

The seasonally adjusted HSBC India Services PMI Business Activity Index was at 58.7 in April, up from 58.5 in March, signaling a sharp and stronger expansion in service sector output.

The headline figure was above its long-term average of 54.2, and a reading above 50 denotes expansion.

Survey findings showed service sector firms gained from demand from Asia, Europe, the Middle East, and the US in April.

New orders also led to a faster expansion in jobs, and the overall positivity in the sector, backed by favorable demand conditions, pushed the services Purchasing Managers Index up by 20 basis points.

“India’s services activity rose faster than last month. New export orders gained momentum after taking a breather in March, accelerating at their fastest pace since July 2024. Margins improved as cost pressures eased and prices charged rose faster. Though firms remained optimistic about future growth, their confidence waned slightly,” Pranjul Bhandari, chief India economist at HSBC, said.

New export orders expanded at the fastest pace since July 2024.

Companies created more jobs due to rising workloads for a 35th consecutive month, but the easing of capacity pressures and lower confidence in the outlook dampened employment growth.

Business activity rose across all parts of the service sector.

Despite increased staffing levels, the rate of backlog accumulation accelerated from March, outpacing its long-term average.

Citing a moderate rise in input cost in the last six months, participants noted that input cost expanded at the slowest pace in April. Participants reported that chemical, cosmetic, fish, staff, and transportation costs were the greater components in the overall input cost burden, while vegetable prices moderated.

The composite PMI consisting of manufacturing and services indices rose to 59.7 in April, up by 20 basis points from March, supported by expansion in new business volumes across the private sector. The survey highlighted that the new order across the manufacturing and services sector rose fastest in eight months, helped by a pick-up in growth across the service economy.