India’s service sector hits 13-year high in March, employment increases: PMI data

India's service sector saw one of the strongest expansions in sales and business activity in over 13-and-a-half years, according to a monthly survey released on Thursday.

The HSBC Purchasing Managers’ Index (PMI), which is seasonally adjusted, rose to 61.2 in March from 60.6 in February. The surge was "largely attributed to healthy demand conditions, efficiency gains and positive sales developments."

According to the HSBC India Services Purchasing Managers' Index, compiled by S&P, companies also signalled a substantial improvement in fresh order intakes in March. "The rate of growth was one of the best seen since June 2010," the report said.

Ines Lam, Economist at HSBC, said, "India's services PMI rose in March, following a small dip in February, on the back of strong demand that spurred sales and business activity. Service providers increased hiring at the fastest pace since August 2023 to expand production capacity. Input costs rose at a faster rate, yet service providers were able to broadly maintain margins by charging higher output prices."

HSBC India Services PMI: Key findings

• Total sales receive a considerable boost from exports
• Business activity has risen to one of the strongest rates since mid-2010
• Rate of charge inflation nears seven-year high
• New export business rose at the fastest rate since the series started in September 2014
• March data showed better demand for Indian services from domestic and international sources

The elevated pressure on the capacity of service providers backed the joint-fastest rise in employment since November 2022.

"Services companies indicated that the substantial upturn in new business volumes added pressure on their capacities...In response, service providers recruited additional staff in March. The latest increase in employment was the twenty-second in as many months, and the joint strongest since November 2022," the survey said.