Following a temporary slowdown in March 2025, India’s service sector saw a slight rebound in growth during April 2025. This renewed momentum was primarily driven by a stronger rise in new orders, which also led to faster job creation. However, increasing backlogs pointed to continued capacity constraints.
On the pricing side, companies raised service charges more sharply, even as input cost inflation dropped to its lowest in six months. The seasonally adjusted HSBC India Services PMI rose to 58.7 in April from 58.5 in March, signalling a strong pace of business activity expansion, well above the historical average of 54.2.
The output surge was fueled by a notable rise in new business, among the highest in eight months, supported by favourable demand and effective marketing. Improved efficiency allowed firms to handle increased workloads, with the Finance & Insurance sector again leading in growth of both output and new orders.
International demand also contributed significantly, with Asia, Europe, the Middle East, and the USA driving the fastest increase in export orders since July 2024.
April marked the 35th consecutive month of employment growth in the service sector, with hiring accelerating compared to March. Businesses added both full-time and part-time staff to meet rising demand. Yet, the volume of unfinished work continued to grow, with the backlog rising more quickly than average.
Input cost inflation eased, led by declining vegetable prices, though increases in chemicals, cosmetics, fish, staffing, and transport kept overall prices higher. Firms responded by raising selling prices at a quicker rate than in March, especially in the Finance & Insurance sector.
While service firms remained generally optimistic about future activity, overall confidence dipped to its lowest in nearly two years due to competitive pressures, despite support from strong demand, advertising, and productivity gains.
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