India's Services Sector Kicks Off FY26 on a High Note
India's services sector has started the new financial year with remarkable strength, as the HSBC Services PMI data released by S&P Global shows a rise to 58.7 in April from 58.5 in March. This growth is attributed to stronger demand and a significant increase in new orders, marking a recovery from a brief slowdown in March.
Key Drivers of Growth
The sector witnessed the highest rise in new business orders in eight months, fueled by supportive market conditions, successful marketing efforts, and improved efficiency. Despite the increase in workloads, hiring accelerated to accommodate the rising demand, with firms expanding their workforce across both full-time and part-time positions.
Export Orders and Sector Performance
New export orders grew at their fastest rate since July 2024, driven by international demand from the US, Asia, Europe, and the Middle East. The finance and insurance sector led in output and new orders, despite facing the fastest rise in charges.
Cost Pressures and Future Outlook
Input prices increased at the slowest rate in six months, with firms passing on higher costs to clients through increased selling prices. While optimism among service providers dipped to its lowest in nearly two years, the private sector saw a modest improvement, with the composite PMI rising to 59.7 in April.
Pranjul Bhandari, chief India economist at HSBC, noted, "India services activity rose at a faster pace than last month. New export orders gained momentum after taking a breather in March, accelerating at its fastest pace since July 2024."
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