India's services sector growth accelerated in March on the back of strong demand, leading to employment increasing at the fastest rate in seven months and export business expanding at a record pace during the month, according to an HSBC survey released on Thursday.
HSBC India Services Purchasing Managers' Index (PMI), compiled by S&P Global, rose to 61.2 last month from February's 60.6. This is well above the 50-mark on the index which separates growth from contraction.
"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," said HSBC economist Ines Lam.
According to S&P Global, companies signalled a substantial improvement in new order intakes during March. The rate of growth was one of the best seen since June 2010.
March data showed better demand for Indian services from domestic and international sources with export business rising at the fastest rate since the series started in September 2014. Survey participants reported gains from Africa, Asia, Australia, Europe, the Americas and the Middle East, said the index compiler.
The faster expansion in services activity comes along with the earlier survey showing a manufacturing industry growing at the quickest pace in 16 years in March, which has taken HSBC final India Composite PMI Index to an eight-month high of 61.8 from the previous month's 60.6.
Rising input costs coupled with robust demand led firms to pass on the increase to clients, resulting in prices charged climbing at the strongest rate since July 2017. The higher prices are likely to be factored in by the RBI to keep its repo rate at 6.50 per cent for a longer period when it announces its monetary policy.
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