India Services Growth Slows In April, But Remains Strongest In 14 Years

The activity in India's service sector eased from a month ago, but continued to show expansion in April, a private survey showed. Despite falling to 60.8 in April from 61.2 at the end of the previous fiscal quarter, the seasonally adjusted HSBC India Services Business Activity Index highlighted one of the strongest growth rates seen in just under 14 years, according to a press release.

Composite PMI fell slightly to 61.5 in April from 61.8 in March, but it remained one of the highest prints seen in close to 14 years.

A figure above 50 indicates expansion.

The latest upturn in output was attributed to favorable economic conditions, strong demand, and rising new work intakes, according to survey members. Business activity increased across the four sub-categories monitored by the survey, led by steep growth in finance and insurance.

Notably, service companies saw the second-fastest increase in new export business in the nearly 10-year series history, second only to March. Still, total new orders continued to rise at a stronger rate than exports.

Amid reports of higher input and labour costs, operating expenses continued to increase in April. Since March, the overall rate of inflation has decreased and now broadly aligns with its long-run average. A backdrop of strong underlying demand enabled service providers to pass on some of their additional cost burdens to clients in the form of increased charges. Still, the rate of selling price inflation eased from March's near seven-year high and was close to its long-run trend.

However, while a few service providers in India showed an increased appetite for new hires in April, several companies also indicated that payroll numbers were sufficient for current requirements. Therefore, compared to the end of the previous fiscal year, the rate of job creation was marginal and softer.

Outstanding business meanwhile increased for the twenty-eighth consecutive month in April, albeit at a slight pace that was softer than in March and broadly aligned with the average over this sequence.

Confidence among service providers towards the year-ahead outlook for business activity improved to a three-month high. Marketing efforts and efficiency gains, along with plans to price competitively and predictions that demand conditions will remain favourable, boosted optimism.