India PMI Services : Softening Growth in Indian Services Sector, Yet Remains Robust


 • The HSBC final India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, dropped to 60.8 in April from 61.2 in March.

This figure contradicted the preliminary estimate, which anticipated a rise to 61.7.

Despite the dip, April's reading still represented one of the fastest growth rates in nearly 14 years.

Consistent Growth Trajectory:

Activity in the services sector has consistently remained above the 50-mark, which signifies growth rather than contraction since August 2021.

 New Business Sub-index:

Favourable market conditions and robust demand propelled the new business sub-index to a three-month high, the third-highest level recorded in approximately 14 years.

Notable strength was observed in domestic demand, although there was a slight moderation in new export orders from March.

 Employment and Business Optimism:

Despite growing business optimism, job creation remained sluggish. However, there has been a continuous sequence of job growth for nearly two years.

Operating costs surged due to elevated raw material and labor costs, yet the rate at which firms passed on these costs to clients softened from March's near seven-year high.

Forecast and Monetary Policy Implications:

A Reuters poll conducted in April forecasted quarterly inflation in India to average 5.0% or below for the fiscal year.

This projection suggests room for the Reserve Bank of India (RBI) to cut rates, with economists anticipating a 50 basis points reduction in the key repo rate by year-end.

The slight dip in the manufacturing index combined with the retreat in services activity led to a decrease in the overall Composite PMI to 61.5 from March's eight-month high of 61.8.

Despite this, the aggregate output across both manufacturing and service sectors rose significantly in April, albeit at a slightly slower pace, indicating sustained health in these sectors.


India's services sector continues to exhibit resilience despite the challenges, with robust domestic and foreign demand driving growth.

While there are concerns such as sluggish job creation and rising operating costs, the overall outlook remains positive, with forecasts suggesting room for monetary policy adjustments to sustain economic momentum.