India?s services sector accelerates in April as domestic demand drives growth
The improvement was driven by stronger domestic demand, increased e-commerce activity, and a shift from international to domestic suppliers amid the war in the Middle East, which particularly supported transport services. New business inflows grew at the quickest pace in five months, led by Consumer Services, followed by Transport and Information & Communication.
However, external demand weakened, with export growth slowing to a five-month low due to the ongoing conflict and subdued inbound tourism. The New Export Business Index dropped by over five points, reaching one of its lowest levels in more than a year.
Cost pressures remained elevated, though they eased slightly from March. Firms reported higher expenses for food, fuel, gas, and labour. Despite this, companies passed on only part of the cost increases to customers, resulting in a moderate rise in selling prices?the weakest in three months.
Business confidence remained positive but softened compared to March due to concerns about rising costs and geopolitical uncertainty. Employment increased across all service segments, supported by higher demand, which also helped firms slightly reduce backlogs.
At the composite level, the PMI rose to 58.2 from 57.0, signalling strong overall private sector growth, although the pace was among the slowest in about two-and-a-half years.
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