India’s services sector witnessed a modest improvement in growth during April, largely supported by a faster rise in new order inflows, which also contributed to increased hiring activity, according to a monthly survey released on Tuesday.

The seasonally adjusted HSBC India Services PMI Business Activity Index rose to 58.7 in April from 58.5 in March, signaling a robust and sharper expansion in the sector. The latest reading remains comfortably above the long-term average of 54.2. In PMI terms, a score above 50 indicates expansion, while a figure below 50 denotes contraction.

“India's service activity rose more swiftly than last month. New export orders, after a temporary slowdown in March, picked up sharply—growing at their fastest pace since July 2024,” said Pranjul Bhandari, Chief India Economist at HSBC.

The rise in output was fuelled by the joint-strongest upturn in new business volumes in eight months, with many service providers citing improved demand and successful marketing efforts. Export demand also improved, with firms noting stronger orders from Asia, Europe, the Middle East, and the US. Overall, new export orders posted their strongest growth since July 2024.

To accommodate this surge in demand, service companies continued expanding their workforce, marking the 35th consecutive month of job creation. Businesses hired both full- and part-time staff to enhance capacity and better meet client requirements.

On pricing, companies raised their selling prices in April to offset increased input costs. The rate of price hikes was faster than in March and exceeded the historical average, the report noted.

“Margins saw improvement as cost pressures eased while output prices rose more quickly,” Bhandari added.

Despite upbeat business activity, optimism for future growth weakened, with overall confidence falling to its lowest in nearly two years. While firms cited advertising, demand strength, and productivity gains as reasons for their optimism, concerns about rising competition tempered their expectations.

Meanwhile, overall private sector activity also edged higher. The HSBC India Composite PMI Output Index rose to 59.7 in April from 59.5 in March, reflecting stronger contributions from both manufacturing and services.

New business volumes across the private sector grew at the fastest rate in eight months, led by a sharper rebound in services and steady gains in manufacturing. Export orders for both segments also strengthened, pushing composite export growth to a nine-month high.

The HSBC India Services PMI is compiled by S&P Global and is based on survey responses from approximately 400 service sector firms.