India's services activities growth rate in April fastest in 14 years, PMI data released

The country's service sector grew at a slightly slower rate in April, but new business and production growth was at its fastest pace in 14 years due to robust demand and favorable economic conditions. From 61.2 in March to 60.8 in April, the HSBC India Services Business Activity Index decreased.

A rise in new jobs, robust demand, and favorable economic conditions were cited by survey participants as the reasons for the most recent uptick in production. An index above 50 denotes expansion and an index below 50 denotes contraction, according to the Purchasing Managers' Index (PMI).

Pranjal Bhandari, chief India economist at HSBC, said India's services activity grew at a slightly subdued pace in April on the back of further pick-up in new orders. Apart from a pick-up in domestic demand, firms also noted new trade gains from several parts of the world. International sales recorded the second fastest growth since the PMI series began in September 2014.

However, many companies indicated that payroll numbers were adequate for current needs, and the rate of job creation was modest and softer than that seen at the end of the last fiscal year. Bhandari said, 'Due to the increase in new orders, companies increased the level of their employees, although the pace of increase in hiring remained slow.

On the price front, costs increased due to wage pressures and higher food prices, which firms partly passed on to their customers. Bhandari said, 'Input costs are continuously increasing rapidly, although it is slower than in March, but this has reduced the margins of service firms. Due to the increase in prices, the firms have passed the burden of a part of it on the customers.

The HSBC India Composite PMI Output Index rose to 61.5 in April from 61.8 in March. The latest reading was the highest in 14 years and is indicative of a substantial rate of expansion in the private sector.