The HSBC India Services Business Activity Index rose to 55.8 in October, driven by stronger home-grown demand, while export growth and hiring cooled.
India’s services sector expanded at its fastest pace in four months in October, as stronger domestic demand and a pickup in new orders lifted business activity, according to HSBC’s monthly survey. The HSBC India Services Business Activity Index rose to 55.8 from 55.2 in September, remaining comfortably above the 50-point mark that separates growth from contraction and pointing to a continued broadening of private sector momentum.
The survey suggested that the improvement was driven mainly by home-grown demand. Service firms reported winning new customers, benefiting from advertising campaigns and seeing a stronger flow of orders, with growth in new business quickening to its fastest pace since June. All four broad service categories tracked in the survey posted stronger output and order growth, led by finance and insurance, while real estate and business services remained the slowest-growing segment.
External demand, by contrast, remained a weak point. New export orders still increased, but only marginally, and the pace was the slowest since February 2023, according to the survey. Hiring also cooled, with firms saying they already had enough staff to handle current workloads. Backlogs of work fell for the third time in four months, and confidence about activity over the next year eased from September and stayed below its long-run average.
Cost pressures were more subdued. Input-cost inflation slowed to its weakest level since August 2020, even though some companies still reported higher bills for electricity, labour, raw materials and transport. Fewer than 3% of service providers raised their prices, indicating limited pass-through to customers. Reuters reported that the combined HSBC composite index, which measures services and manufacturing together, climbed to 56.2 from 55.9, the strongest reading for private sector output in four months, even as factory growth moderated slightly. Manufacturing PMI slipped to 54.7 in October but remained firmly in expansion territory.
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