India Services PMI Eases to 58.5 in March 2025; Hiring and Export Demand Slow

India’s services sector growth eased in March 2025, according to the latest HSBC India Services Purchasing Managers’ Index (PMI) released by S&P Global. While the expansion remained strong, the momentum slightly weakened due to softer demand, slower foreign orders, and moderated hiring activity.

Services PMI Slips but Remains Firm

The Services PMI slipped to 58.5 in March from 59.0 in February, although it was above the flash estimate of 57.7. A reading above 50 still indicates expansion. The decline reflects a slight cooling in domestic demand and reduced global interest.

Domestic Orders Strong, but Export Growth Slows

New businesses continued to grow, led by strong domestic demand. However, international orders rose at the slowest pace in 15 months, impacted by global economic uncertainty and trade concerns triggered by recent US tariff announcements under President Donald Trump.

Input Costs and Output Prices

Input cost inflation eased to a 5-month low, and firms raised output prices at the weakest pace since September 2021, citing intense market competition. The moderation in pricing pressure could provide some comfort to the Reserve Bank of India as it balances inflation with growth.

Hiring Activity Slows

Job creation in the services sector decelerated, with the pace of hiring slipping to the lowest level in nearly a year. Weakening business confidence also contributed to reduced employment activity. The future activity index, a measure of optimism for the next 12 months, fell to a 7-month low.

Composite PMI Hits 7-Month High

Despite the moderation in services, the HSBC India Composite PMI, which combines both manufacturing and services data, rose to a seven-month high of 59.5 in March, up from 58.8 in February. This was supported by strong growth in the manufacturing sector.

Conclusion

India’s services sector remains in expansion territory but faces growing headwinds from global uncertainty, weaker foreign demand, and subdued hiring. As the sector adjusts to evolving domestic and international conditions, the broader economy continues to benefit from manufacturing-led momentum.

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