The services PMI rose to 55.8 in October on stronger domestic demand, while input-cost inflation eased to its slowest pace since August 2020 and hiring growth cooled.
India’s services sector expanded at its quickest pace in four months in October, as firmer domestic demand and a rise in new business helped keep momentum in the economy’s largest services industries, according to HSBC’s latest Purchasing Managers’ Index. The seasonally adjusted business activity index climbed to 55.8 from 55.2 in September, comfortably above the 50-point mark that separates growth from contraction and enough to signal the strongest monthly expansion since June. The report also showed that India’s composite PMI, which combines manufacturing and services, rose to 56.2 from 55.9, pointing to the fastest increase in overall private-sector output in four months.
Business Standard said the improvement was led by stronger sales and healthier client demand, with survey respondents pointing to new customer wins, advertising efforts and generally supportive market conditions. Finance and insurance were the best-performing areas of services activity and new orders, while real estate and business services grew more slowly than the other tracked segments. Even so, the latest reading suggests the services sector remained a key support to India’s broader growth picture in October, after the flash PMI survey had already pointed to a solid month for private-sector activity.
The report also showed a notable easing in price pressures. Input-cost inflation slowed to its weakest pace since August 2020, even though some companies reported higher spending on electricity, labour, raw materials and transport. Selling-price inflation softened too, with fewer than 3% of service providers raising charges during the month. Reuters, summarising the flash survey earlier in the month, said the moderation in costs and prices was broad-based across the private sector, although services still faced less intense price pressure than manufacturing.
There were, however, signs that the sector’s underlying pace of hiring had cooled. Employment growth eased to a four-month low and was described as only marginal, while growth in overseas orders slowed to its weakest since February 2023. Business confidence also slipped from September, even though service providers remained upbeat about output over the coming year. Pranjul Bhandari, chief India economist at HSBC, said the data suggested businesses still had enough capacity to meet demand, with the slowdown in hiring and export orders hinting at a more cautious outlook after several months of steady expansion.
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