The HSBC India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, dropped to 57.5 in March from 58.1 in the previous month, still remaining firmly above the long-term average of 54.4. A reading above 50 indicates expansion. Coupled with manufacturing growth easing to a nearly four-year low, the relative slowdown in the services sector pulled down the overall Composite PMI to 57 in March from 58.9 in the previous month, the weakest expansion in about three-and-a-half years. New business intake, a key gauge for demand, rose at the slowest pace since January 2025, as the survey respondents flagged difficult market dynamics, waning domestic demand, and competition.
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However, international orders jumped to their second-highest since the index was added to the survey in September 2014. “While new business gains continued to underpin growth, according to panellists, output was constrained by the detrimental impact of the Middle East war on demand, market conditions and tourism,” S&P Global said in a statement. The sluggish pace of new orders took place in parallel to a pick-up in output charge inflation to a seven-month high.
Meanwhile, output charge inflation scaled a seven-month peak in March, but still trailed cost inflation by the strongest margin since July 2023. This signals that services firms absorbed a part of the additional costs even as they passed on some to clients, the survey showed.
Meanwhile, employment rose at the strongest pace since June 2025, having recorded a third straight month of expansion, as business confidence grew to its highest in nearly 12 years. “Optimism was pinned on hopes of an improvement in demand and market conditions,” said S&P Global.
Pranjul Bhandari, chief India economist at HSBC, said the sharp increase in input cost inflation indicates that higher fuel, transport and logistics costs are feeding into services.