India's services sector experienced a slight uptick in growth in April 2025, with the HSBC India Services Purchasing Managers' Index (PMI) edging up to 58.7 from March's 58.5. This marginal increase indicates continued expansion, driven by robust domestic and international demand, particularly in the finance and insurance sub-sectors. Export orders grew at their fastest pace since July 2024, contributing to the sector's performance.
Service providers expanded their workforce for the 35th consecutive month, with the rate of job creation accelerating from March and exceeding the long-term average. Easing input costs allowed firms to raise prices more quickly, supporting improved profit margins. These conditions provided the Reserve Bank of India with the flexibility to cut its key repo rate by 50 basis points this year, with further reductions anticipated.
However, despite these positive indicators, business sentiment declined for the fifth consecutive month, reaching its lowest level since mid-2023. This decline in confidence is attributed mainly to rising competition in the sector. Overall private sector activity, as captured by the composite PMI including manufacturing and services, rose to 59.7 in April, the highest since August, indicating robust economic momentum.