India's service sector made a strong start to the first fiscal quarter – according to HSBC PMI data compiled by S&P Global – as growth of new business and output remained sharp and among the fastest in 14 years. In addition to buoyant domestic demand, firms noted new business gains from several parts of the world, which collectively underpinned the second-quickest upturn in international sales since the series started in September 2014.
Wage pressures and higher food prices meanwhile led to another increase in cost burdens, which firms partially passed on to their customers. Charge inflation eased from March's near seven-year high, however.
Despite falling from 61.2 at the end of the previous fiscal quarter to 60.8 in April, the seasonally adjusted HSBC India Services Business Activity Index highlighted one of the strongest growth rates seen in just under 14 years. Survey members attributed the latest upturn in output to favorable economic conditions, demand strength and rising intakes of new work.
Notably, services companies observed the second-fastest increase in new export business in the near ten-year series history, behind only that seen in March.
Still, total new orders continued to rise at a stronger rate than exports. Buoyed by rising inflows of new business, a few service providers in India showed an increased appetite for new hires in April.
Despite coming in below the Flash estimate (62.2), the final HSBC India Composite PMI Output Index still signaled a substantial rate of expansion across the private sector. At 61.5 in April (March: 61.8), the latest reading was one of the highest seen in close to 14 years.
As was the case for output, manufacturers continued to note a stronger increase in new business intakes than service providers. Aggregate sales rose sharply, and at one of the fastest rates since mid-2010. Goods producers also led April's rise in payroll numbers, with softer growth in the service economy curbing job creation at the composite level.