India’s Services Sector Gains Momentum in April as Strong Domestic Demand Boosts PMI

BENGALURU, May 6: India’s services sector recorded stronger growth in April, supported by rising domestic demand and increased business activity across key industries, according to the latest HSBC India Services Purchasing Managers’ Index (PMI) survey released on Wednesday.
The survey, compiled by S&P Global, showed the Services PMI climbed to 58.8 in April from 57.5 in March, which had marked a 14-month low. The latest figure also exceeded the preliminary estimate of 57.9, reflecting sustained momentum in the country’s private sector economy.
A PMI reading above 50 indicates expansion, while a figure below 50 signals contraction. India’s services sector has now remained in expansion territory continuously since mid-2021.
New Business Orders Rise Sharply
The report highlighted a significant increase in fresh business orders during April, with growth reaching its fastest pace in five months. Analysts attributed the rise mainly to stronger domestic consumption and improving market confidence.
Consumer services emerged as the leading contributor to growth, while transport, information technology, and communication services also posted healthy gains in output and demand.
Businesses reported improved customer activity and higher spending patterns, which helped support the overall rise in services sector performance.
Global Demand Faces Pressure
Despite strong domestic momentum, overseas demand remained under pressure during the month. International sales growth slowed to its second-weakest level in more than a year.
Survey participants pointed to geopolitical tensions in the Middle East and weaker inbound tourism activity as major reasons behind the slowdown in foreign demand.
Companies involved in travel, hospitality, and export-linked services said global uncertainty continued to affect international business sentiment.
Cost Pressures Remain Elevated
The survey also noted that operating expenses continued to rise in April, although the pace of inflation softened compared to March, when cost increases had reached nearly a four-year high.
Businesses cited higher spending on food items, fuel, gas, and employee wages as the primary factors contributing to elevated operational costs.
However, companies largely absorbed these additional expenses instead of fully passing them on to consumers. Selling prices increased only moderately and at the slowest pace seen in the past three months.
Hiring Activity Sees Strong Improvement
Improved business volumes encouraged firms to expand their workforce during April. Employment growth reached its strongest level in 10 months, driven mainly by hiring of temporary staff and junior-level trainees.
Many businesses expressed confidence in sustaining current activity levels, particularly in sectors linked to domestic consumption and digital services.
Composite PMI Signals Broad Economic Expansion
India’s overall Composite PMI Index, which combines manufacturing and services activity, rose to 58.2 in April from 57.0 in March. The increase indicated a historically strong pace of expansion in the country’s private sector economy.
Economists said the latest data reflects the resilience of India’s domestic market despite ongoing global uncertainties and geopolitical risks affecting international trade flows.
While business confidence remained positive overall, companies expressed caution regarding future global developments, particularly tensions in West Asia and their potential impact on energy prices and international demand.