India's services PMI hits 58.7 in April, export orders drive modest growth

India April 2025 Services PMI: Composite PMI, which combines manufacturing and services PMI, improves to 59.7, up from 59.5 in March

 

India’s Services Purchasing Managers' Index (PMI) for April 2025, compiled by S&P Global, rose to 58.7, signalling a slight growth in the country’s services sector compared to 58.5 recorded in March.

 

The India Composite Purchasing Managers' Index (PMI) rose to 59.7, up from 59.5 in March.

 

A PMI reading above 50 signals sector expansion, while a reading below 50 indicates contraction, and 50 reflects no change.

 

New business intakes, effective marketing drive service growth

 

The overall growth in output was driven by a substantial rise in new business intakes, matching an eight-month high, with numerous companies reporting favourable market conditions and effective marketing campaigns. Some businesses noted that efficiency improvements allowed them to take on more work. Consistent with patterns observed in the previous survey period, the finance and insurance sub-sector showed the strongest growth rates for both output and new orders.

 

"India's 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. Margins improved as cost pressures eased and prices charged rose at a faster pace. Though firms remained optimistic about future growth, their confidence waned slightly," Pranjul Bhandari, chief India economist at HSBC, said.   

 

Export orders sees fastest growth in 9 months

 

 Indian service providers continued to experience benefits from strengthened international demand, with particular growth noted from Asia, Europe, West Asia, and the US markets. The expansion of new export orders reached its fastest pace since July 2024.

 

What is services PMI and why it matters?

 

The Services PMI (Purchasing Managers' Index) is an indicator that provides insight into the performance and economic health of the services sector. The index keeps track of key variables in the services industry including sales, employment levels, inventory management, and prices. The index helps investors, economists, and policymakers understand current business conditions.

 

Composite PMI Output Index for April

 

India's composite PMI, which combines the data from both the Manufacturing PMI and the Services PMI, also improved to 59.7, up from 59.5 in March. The latest data showed a sharp rate of expansion that was the strongest since August 2024. New business volumes across the private sector grew at the quickest pace in eight months, supported by a pick-up in growth in the service economy. Both manufacturing and service sectors recorded faster increases in new export orders. At the composite level, the growth rate reached a nine-month high.

 

Manufacturing PMI hits 10-month high of 58.2 in April

 

The manufacturing sector had registered a 10-month high in April 2025, despite the HSBC India Manufacturing PMI only rising slightly to 58.2 from 58.1 in March. This followed a 14-month low of 56.3 in February, when output, new orders, and input purchasing had lagged. The improvement in April was marked by a growth in production, employment and stocks of purchases.

 

IIP growth rises to 3% in March

 

In March, the Index of Industrial Production (IIP) growth recovered slightly to 3 per cent from a six-month low of 2.72 per cent in February, while overall industrial output growth for 2024-25 (FY25) stood at a four-year low of 4 per cent.

 

Reserve Bank of India reduces repo rate to 6% in April, signals additional rate cuts

 

The Reserve Bank of India's Monetary Policy Committee (MPC) slashed the repo rate by 25 basis points to 6 per cent, bringing it down to 6 per cent in April. The MPC changed its policy stance from "neutral" to "accommodative," suggesting more rate cuts may follow. This marked the second rate reduction in 2025 after the policy rate was cut from 6.5 per cent to 6.25 per cent in February.