India’s dominant services industry exhibited continued growth in April, albeit at a slightly slower pace than March’s record-high. The HSBC final India Services Purchasing Managers’ Index (PMI) fell marginally to 60.8 in April from 61.2 in March, indicating one of the fastest growth rates in over 14 years. The PMI has remained above the 50-mark separating growth from contraction since August 2021. Favorable market conditions and buoyant demand drove the new business sub-index to a three-month high and the third-highest in around 14 years. Despite a slight moderation in new export orders compared to March, overall demand remained robust, supported by strong global demand for Indian services. However, despite strong business optimism, job creation did not significantly increase, and the current sequence of job growth extended to almost two years. The increase in operating costs due to elevated raw material and labor costs remained a challenge, although the rate at which firms passed on these costs to clients eased compared to the near seven-year high seen in March. India’s quarterly inflation is forecast to average 5.0% or below in the current fiscal year, potentially providing room for the Reserve Bank of India (RBI) to reduce interest rates. Economists anticipate the RBI may lower its key repo rate by 50 basis points before the end of the year. Notably, a manufacturing index released on Thursday also showed a slight dip in April, bringing down the overall Composite PMI to 61.5 from March’s eight-month high of 61.8. These indicators suggest sustained health in both the manufacturing and service sectors, although the pace of growth has moderated slightly.
India’s Services Industry Remains Strong in April Despite Slight Decline
