Due to strong demand, growth rate of service sector in March was at a high of 13 and a half years, PMI figures released

Due to strong demand, the growth rate of the country's services sector in March was one of the strongest in 13 and a half years. HSBC India Services Business Activity Index increased from 60.6 in February to 61.2 in March. In the language of the Purchasing Managers' Index (PMI), an index above 50 indicates expansion while below 50 indicates contraction. The HSBC India Services PMI is compiled from responses to a questionnaire sent by S&P Global to a panel of approximately 400 services sector companies.

The report said, 'India's services PMI increased in March after a slight decline in February and sales and business activity picked up due to strong demand. "Service providers increased hiring at the fastest pace since August 2023 as they look to expand production capacity," HSBC economist Ines Lam said.

According to the survey, the main reasons for the uptick in sales are better demand conditions, an increase in efficiency and positive growth in sales. Companies indicated considerable improvement in new order intake during March. The rate of growth was the best seen since June 2010.

New export business grew at the fastest rate since the series began in September 2014. Survey participants reported benefits from Africa, Asia, Australia, Europe, the Americas and the Middle East. Service companies indicated that the surge in new business volumes had put a strain on their capabilities. For this reason, service providers recruited additional staff in March.

"While input costs have increased at a rapid rate, service providers have been able to maintain margins by charging higher output prices," the survey said. Going forward, service sector companies expect demand trends to remain favourable and marketing efforts to continue. "Also is seen as an opportunity for growth. However, there are some concerns about competitive pressures," the survey said.

The HSBC India Composite PMI Output Index increased from 60.6 in February to 61.8 in March. A weighted average of similar PMI indices for manufacturing and services makes up the composite PMI index. Based on official GDP figures, the weights indicate the relative sizes of the manufacturing and service sectors. India's total output increased significantly in March, according to data, with growth reported by both service and goods providers.