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Reuters
04-04-2025
- Business
- Reuters
India March services growth moderated, inflation eased sharply, PMI shows
BENGALURU, April 4 (Reuters) - The rapid expansion in India's dominant services sector cooled slightly in March amid softer demand, despite firms raising prices at the lowest rate in three-and-a-half-years, according to a survey that also showed a deceleration in job creation. The HSBC final India Services Purchasing Managers' Index (INPMIS=ECI), opens new tab, compiled by S&P Global, fell to 58.5 last month from 59.0 in February, but was higher than a preliminary estimate that showed a fall to 57.7. However, it remained comfortably ahead of the 50-mark separating contraction from growth. "Domestic and international demand remained fairly buoyant, despite being sequentially a tick lower than the month before," noted Pranjul Bhandari, chief India economist at HSBC. Domestic demand remained a key driver, with new business showing solid growth, albeit at a less intense pace compared to February. Foreign demand softened and international orders rose at the slowest pace in 15 months, signaling potential vulnerabilities to global economic shifts including from U.S. President Donald Trump's recently announced tariff measures. Inflationary pressures subsided with input cost inflation rising at its slowest pace in five months. That, along with intense competition, led to the weakest increase in output prices since September 2021. The competitive landscape weighed on business sentiment for the coming year and the future activity index cooled to a seven-month low, affecting employment growth. The pace of hiring additional staff slowed to the lowest in just under a year. "Looking ahead, business sentiment remains generally positive, but intensifying competition presents a significant challenge to many survey participants," added Bhandari. The HSBC India Composite PMI, which included robust manufacturing growth, rose to a seven-month high of 59.5 in March from February's 58.8, reflecting stronger overall private sector growth. Manufacturing growth outpaced services, but both sectors saw moderating employment growth and business confidence. Weaker inflation and poor business confidence could compel the Reserve Bank of India to cut interest rates again, by 25 basis points on April 9, to support an economy which likely grew at its slowest rate in four years last fiscal year.
Reuters
05-03-2025
- Business
- Reuters
Robust demand propels India's services sector growth in February, PMI shows
BENGALURU, March 5 (Reuters) - Growth in India's services sector accelerated in February, supported by robust demand and a firm business outlook that led to a substantial increase in hiring, a survey showed. Asia's third-largest economy expanded 6.2% year-over-year last quarter, lifted by government and consumer spending. The government expects India to grow 6.5% for the full financial year on expectations urban consumption will improve after weakening due to feeble job and income growth. HSBC's final India services Purchasing Managers' Index (INPMIS=ECI), opens new tab, compiled by S&P Global, rose to 59.0 in February from January's 26-month low of 56.5 but was lower than a preliminary estimate of 61.1. It has remained above the 50-mark separating expansion from contraction since mid-2021. "Global demand, which grew at its fastest pace in six months according to the new export business index, played a major role in driving output growth for India's services sector," noted Pranjul Bhandari, chief India economist at HSBC. Overall demand for services picked up in February, recovering from January's 14-month low, while growth in foreign orders reached its highest in six months. Services companies remained optimistic about the business outlook for the upcoming 12-months. The future activity sub-index, gauging sentiment, stayed firm despite falling to a six-month low. To meet rising demand, companies hired additional staff leading to a strong expansion in employment. The rate of cost price inflation slipped to a four-month low. Despite that, firms passed on some of the extra burden to customers leading to a higher increase in charge inflation last month. Inflation in India has mostly remained within the Reserve Bank of India's (RBI) target range of 2-6%, prompting the central bank to cut its key repo rate in February. The RBI lowered the interest rate to 6.25% from 6.50% and is expected to ease further to boost the economy. The substantial rise in services growth offset a 14-month low expansion rate in manufacturing (INPMI=ECI), opens new tab, driving the overall Composite PMI to rise to 58.8 last month from 57.7 in January.
Reuters
05-02-2025
- Business
- Reuters
Growth in India services sector slows to more than 2-year low in Jan, PMI shows
BENGALURU, Feb 5 - Growth in India's dominant services sector was the slowest in over two years in January amid cooling demand but remained historically strong and led to a substantial rate of hiring, a business survey showed on Wednesday. Asia's third-largest economy has been struggling with slackening consumption. To try and boost spending the government gave some tax relief to the middle class at its annual budget on Feb. 1 but shied away from announcing big reforms which are much needed to prop up growth. The HSBC final India Services Purchasing Managers' Index (INPMIS=ECI), opens new tab, compiled by S&P Global, fell to 56.5 in January from 59.3 in December, a tad lower than a preliminary estimate of 56.8 but comfortably ahead of the 50-mark separating contraction from growth. "The business activity and new business PMI indices eased to their lowest levels since November 2022 and November 2023 respectively," said Pranjul Bhandari, chief India economist at HSBC. "That said, new export business partly countered the downtrend and continued to rebound from a dip in late-2024, in line with official data." Demand for services rose at the slowest pace in 14 months but remained sturdy. It was supported by international demand that was the strongest in five months. The future activity sub-index moderated to a three-month low but the fall was insignificant and firms hired new staff at one of the fastest paces since the inception of the survey in December 2005. Inflationary pressures picked up, as both input costs and prices charged rose at a strong pace. But India's retail inflation eased to a four-month low in December, increasing the chances of easier monetary policy. The Reserve Bank of India is widely expected to cut its key repo rate on Feb. 7, a Reuters poll taken last week showed. Slower services growth overshadowed a six-month high pace of expansion in the manufacturing sector (INPMI=ECI), opens new tab and dragged the overall Composite PMI down to 57.7 last month from 59.2 in December.
