India’s services sector, which includes industries like hospitality and finance, grew faster in March due to high demand. According to a private business survey, companies hired more employees at the fastest rate in seven months. Exports also saw a significant increase.
The HSBC India Services Purchasing Managers’ Index, compiled by S&P Global, rose from 60.6 in February to 61.2 in March, marking the 32nd consecutive month of growth.
With services activity picking up speed and the manufacturing sector experiencing its fastest growth in 16 years in March, the HSBC final India Composite PMI Index hit an eight-month high of 61.8, surpassing the previous month’s 60.6 and beating a preliminary reading of 61.3.
India’s Services PMI Surges in March Amid Strong Demand
India’s services Purchasing Managers’ Index (PMI) rose in March, rebounding from a slight decline in February. Strong demand spurred sales and business activity, according to Ines Lam, an economist at HSBC. The increase in new business was primarily propelled by domestic demand, with exports also witnessing a significant surge, prompting companies to ramp up hiring.
This is promising for India, given the substantial number of people entering the job market annually. While businesses express optimism about the future, there are concerns about competition. Despite rising costs leading to higher prices for goods and services, companies managed to preserve their profit margins by passing these costs to customers.
Positive Signs for India’s Economy
According to economist Ines Lam, India’s services PMI saw a rise in March, driven by strong demand that boosted sales and business activity. New business flourished, especially due to domestic demand, while exports surged to their highest level since 2014. Consequently, companies increased hiring at the fastest rate in seven months, signaling a positive trend for the job market. Although there was a slight dip in future activity, optimism remains, albeit with lingering concerns about competitive pressures. This indicates a positive trajectory for India’s economy, as evidenced by the composite PMI index reaching an eight-month high in March.
Despite a recent drop in the future activity sub-index to a four-month low due to competitive concerns, the upcoming year holds a positive outlook. Rising input costs, coupled with strong demand, led firms to raise prices for clients, marking the fastest rate of price growth since July 2017. In response to faster rising input costs, service providers maintained margins by increasing output prices, as noted by Lam. These heightened prices might prompt the Reserve Bank of India to keep its repo rate at 6.50% for an extended period.
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