Services sector growth picks up in March on robust demand

NEW DELHI: India's services sector posted one of the strongest expansions in total sales and business activity in nearly 14 years in March, led by buoyant demand and record export orders, a private survey showed Thursday.

The seasonally adjusted HSBC India Services Business Activity Index rose to 61.2 in March from 60.6 in February. The performance was largely attributed to healthy demand conditions, efficiency gains and robust sales.

The HSBC India Composite PMI Output Index rose to 61.8 in March from 60.6 in February, the second-strongest growth in over 13-and-a-half years. A reading above 50 indicates expansion.


"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," said Ines Lam, economist at HSBC.

Companies signalled strong improvement in new orders in March, with better demand in the local market and overseas. New export business rose at the fastest rate since the series started in September 2014, with survey participants reporting gains from Africa, Asia, Australia, Europe and the Middle East.

Finance and insurance topped growth rankings. As per the report, consumer services saw the highest rate of input cost inflation while finance and insurance topped rankings for selling prices.

The latest increase in employment was the joint-strongest since November 2022.

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

Amid reports of higher labour and material costs, there was an increase in overall expenses at services firms. The rate of input price inflation was markedly faster than February and exceeded the long-run average.

The combination of rising cost pressures and demand strength encouraged companies to increase selling prices in March.

The rate of charge inflation climbed to the highest since July 2017. The highest rate of input cost inflation was seen in consumer services, while finance and insurance topped rankings for selling prices.