India Services Growth Revised Slightly Lower

The HSBC India Services PMI fell to 57.2 in March 2026 from 58.1 in February, signaling a slower yet still solid expansion in the services sector. The latest reading marked the weakest growth since January 2025, weighed by softer domestic demand despite resilient external conditions. New business growth eased to a three-year low, though export orders hit a series high, supported by broad-based international demand. However, geopolitical tensions in the Middle East, market volatility, and inflationary pressures, weighed on activity and disrupted segments such as international travel. On prices, input costs rose at the fastest pace in nearly four years, with firms passing on only part of the increase. Despite softer demand, hiring continued to expand, with employment rising at the fastest rate since August 2025. Looking ahead, sentiment remained positive, underpinned by expectations of improved efficiency, stronger marketing efforts, and new client gains, even as cost pressures persist.

The HSBC India Services PMI was revised slightly down to 58.1 in February 2026 from an initial estimate of 58.4. This was below January’s reading of 58.5 and forecasts of 58.6, yet still signaled another month of robust expansion in the sector. While new order growth slowed to a 13-month low due rising competition, international sales rose at the fastest pace since last August. This led firms to increase hiring, with the rate of job creation surpassing its long-term trend. Meanwhile, services companies faced mild operating capacity pressures, reflected in a second monthly rise in backlogs. Cost pressures also intensified, with input inflation accelerating to a two-and-a-half-year high, driven by higher food prices and increased spending on energy, labour, and commodities. Output price inflation also rose to a six-month high. Nonetheless, business confidence climbed to its highest level in a year as companies sought to expand their presence in both existing and new markets.

The HSBC India Services PMI edged down to 58.4 in February 2026 from 58.5 in January, pointing to a slightly slower but still strong expansion in services activity, preliminary estimates showed. While overall business activity softened marginally, services firms recorded a notable acceleration in new export orders, with international sales rising at the fastest pace since August 2025. However, domestic demand moderated, partly reflecting competitive pressures and cheaper service offerings elsewhere. Stronger export growth and rising backlogs encouraged companies to increase hiring, with employment expanding at a modest but faster pace. On the price front, input costs rose at the steepest rate in two-and-a-half years. In response, firms lifted selling prices at a quicker rate. Looking ahead, sentiment improved, with businesses expressing their strongest optimism in a year, supported by expectations of gains from investment and marketing efforts despite elevated cost burdens.