India’s dominant services industry grew faster in March 2024 amid strong demand, according to a private business survey that also showed employment increased at the fastest rate in seven months and export business expanded at a record pace.
| Photo Credit: The Hindu
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, April 4, 2024.
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 signalled 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.
Addtional recruitment in services sector
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 22nd in 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.
Going ahead, services companies expect demand trends to remain favourable, with marketing efforts also seen as a growth opportunity. There were, however, some concerns surrounding competitive pressures, the survey said.
Meanwhile, the HSBC India Composite PMI Output Index rose from 60.6 in February to 61.8 in March, highlighting the second-strongest upturn in over 13-and-a-half years.
Composite PMI indices are weighted averages of comparable manufacturing and services PMI indices. Weights reflect the relative size of the manufacturing and service sectors, according to official GDP data.
March data pointed to a sharp increase in aggregate output across India, as both goods producers and service providers noted a pick-up in growth.
