New orders take services PMI to 14-yr high

New Delhi: India’s services sector witnessed one of the strongest growth rates in over 13-and-a-half years in March on the back of strong demand that spurred sales and business activity, a monthly survey said on Thursday.

The seasonally adjusted HSBC India Services Business Activity Index rose from 60.6 in February to 61.2 in March, one of the strongest expansions in total sales and business activity in close to 14 years. In the Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

The HSBC India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies.

“India’s services PMI rose in March, following a small dip in February, on the back of strong demand that spurred sales and business activity. Service providers increased hiring at the fastest pace since August 2023 in order to expand production capacity,” said Ines Lam, Economist at HSBC. The upturn was largely attributed to healthy demand conditions, efficiency gains, and positive sales developments, the survey said. Companies signaled a substantial improvement in new order intakes during March.

The rate of growth was one of the best seen since June 2010. New export business rose at the fastest rate since the series started in September 2014. Survey participants reported gains from Africa, Asia, Australia, Europe, the Americas, and the Middle East. Services companies indicated that the substantial upturn in new business volumes added pressure on their capacities. Accordingly, service providers recruited additional staff in March.

“The latest increase in employment was the 22ndin as many months, and the joint-strongest since November 2022,” the survey said.

The survey further noted that there has been an intensification of price pressures, with both input costs and output charges increasing at faster rates.

“Input costs rose at a faster rate, yet service providers were able to broadly maintain margins by charging higher output prices,” the survey said.