After witnessing a slight deceleration in March, India’s services sector regained momentum in April, thanks to a quicker pace of new order inflows. This uptick in demand also supported a stronger rise in employment across the industry.

The HSBC India Services Purchasing Managers’ Index (PMI) edged up to 58.7 in April from 58.5 in March, signalling a more robust expansion in service sector output. The reading remained well above the long-term average of 54.2, highlighting continued strength in the sector.

While the business climate improved, firms continued to experience rising capacity pressures, reflected in a solid increase in outstanding workloads. On the pricing side, selling prices rose at a faster clip even though input cost inflation eased to a six-month low.

New business drives growthThe latest surge in activity was largely fuelled by a notable increase in new business volumes — one of the strongest seen in the past eight months. Survey participants attributed the improvement to favourable demand conditions and the success of recent marketing campaigns. Some also cited efficiency improvements that allowed them to handle more work.

Among various categories, the Finance & Insurance segment once again led growth for both output and new orders, continuing a trend observed in previous months.

Exports and hiring on the riseIndian service providers also reported stronger international demand, with notable increases in export orders — the fastest growth since July 2024. Regions such as Asia, Europe, the Middle East, and the United States were cited as key drivers of this growth.

Meanwhile, April marked the 35th straight month of job creation in the sector. The rate of hiring accelerated compared to March, with firms bringing on both full- and part-time staff to manage the rise in demand. However, despite higher staffing levels, backlogs continued to grow, with the pace of accumulation also picking up.

Input costs easeInput cost inflation moderated to its lowest level in six months. Firms reported higher costs in areas such as chemicals, cosmetics, fish, transportation, and staffing — though vegetable prices had eased. To protect margins, many service providers raised their selling prices. The pace of charge inflation quickened and remained above the long-run average.

Consumer Services companies continued to face the most intense cost pressures, though these had softened slightly since March. Notably, the Finance & Insurance sector posted the sharpest increase in selling prices.

Confidence cools amid competitive pressuresDespite a broadly upbeat performance, overall business confidence took a hit. Optimism around future activity remained positive but fell to its lowest level in nearly two years. While firms were hopeful about growth driven by advertising, steady demand, and productivity gains, concerns around rising competition weighed on their outlook.

Movement of Services PMI so far