Service sector is growing at a 14-year high thanks to foreign orders and effective demand

Indian Economy: The world continues to have confidence in India's strong economy. Despite a slowdown, service sector activity in the country reached a 14-year high in April 2024 due to new orders from many parts of the world.

May 7, 2024 - 14:52
Service sector is growing at a 14-year high thanks to foreign orders and effective demand

The robust economy of India continues to inspire confidence in the world. Due to fresh orders from all over the world, the nation's service sector activity reached a 14-year high in April 2024 despite a slowdown. HSBC India's Services Business Activity Index reached its highest level since mid-2010 last month, at 60.8, thanks to robust demand and favorable economic conditions. In March 2024, the Purchasing Managers Index (PMI) for services was 61.2.

Pranjul Bhandari, chief economist at HSBC India, said the pace of growth in India's services sector activity slowed slightly in April. This was supported by new orders and economic growth with notable strength in domestic demand. According to the report, domestic companies received new orders from different parts of the world. This marked the second fastest growth in international sales since the series launched in September 2014. PMI being more than 50 indicates expansion in activities and a figure below it indicates decline.

On the jobs front, the report said some domestic service providers made new hires in April amid a pick-up in new business orders. However, some companies said the number of employees was sufficient for current needs. The rate of employment creation remained slow compared to the end of the last financial year.

Companies faced a rise in input costs in April due to rising wages and higher food prices. However, its pace remained slow since March. This reduced the margins of the companies. To compensate for the increased costs, companies passed the partial burden of the cost on to customers.

Looking ahead to one year, business confidence among services sector companies rose to a three-month high in April. Bhandari said, that marketing efforts and increased efficiency along with competitive pricing plans and favorable demand conditions have boosted business optimism.

Muskan Kumawat Journalist & Writer