New Delhi [India], May 6 : India's service sector made a strong start to the first quarter of financial year 2024-25, according to HSBC PMI data compiled by S&P Global.
The growth of new business and output remained sharp and among the fastest in 14 years.
In addition to buoyant domestic demand, companies noted new business gains from several parts of the world, which collectively underpinned the second-quickest upturn in international sales, HSBC India Services PMI released on Monday said.
Wage pressures and higher food prices meanwhile led to another increase in cost burdens, which firms partially passed on to their customers.
As compiled by S&P Global in the HSBC India Services PMI Business Activity Index, the index declined from 61.2 in March to 60.8 in April.
Total new orders continued to rise at a stronger rate than exports. The upturn in overall sales was sharp, well above its long-run average and among the strongest in 14 years.
"India's service activity rose at a slightly softer pace in April, backed by a further rise in new orders, with a notable strength in domestic demand," said Pranjul Bhandari, Chief India Economist at HSBC.
"Although new export orders remained robust, they showed a slight moderation from March figures. In response to increased new orders, firms expanded their staffing levels, though the pace of hiring growth decelerated. Input costs continued to rise sharply, albeit slower than in March, but resulted in squeezed margins for service firms...," Bhandari said.
Overall confidence among service providers for the year-ahead outlook improved markedly, bolstered by resilient demand conditions, Bhandari added.
"In terms of overall activity, aggregate output across both the manufacturing and service sectors rose significantly in April, albeit at a slightly slower pace, indicating sustained health in these sectors."
India's exports of services rose 4.4 per cent to USD 339.62 billion in the just concluded financial year 2023-24.
According to a Goldman Sachs report, services exports are expected to more than double by 2030 to USD 800 billion.
Coming to digitally delivered services, they have been rising over the past decade. Digitally delivered services broadly refer to those which are delivered remotely over computer networks.
India featured at number three in the list of Top 10 services exports countries in 2023, after Ireland and Singapore, in terms of Compound Annual Growth Rate (CAGR).
Among business services exports, business and management consultancy and public relations services expanded at a rate of 29 per cent, during 2020-21 and 2022-23 vis-a-vis 2017-18 and 2019-20; engineering services 8.4 per cent; advertising trade fair services 5.1 per cent; others 4.8 per cent; research and development services 3.6 per cent.
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