Growth in India’s services sector accelerated to a four-month high in October as input cost inflation eased and new business picked up, according to a private survey released on Wednesday.
The HSBC India Services Purchasing Managers’ Index (PMI) rose to 55.8 in October from 55.2 in September.
“All four broad areas of the service economy tracked by the PMI survey recorded quicker expansions in new business and output, with growth led by Finance & Insurance in both cases. Real Estate & Business Services came last in the rankings,” the survey noted.
Growth in new business was the main driver of higher output, with overall sales rising at their fastest pace since June. Favourable demand conditions, new client wins and successful advertising campaigns boosted new order intakes, the survey said.
The October reading remained above the 50-point mark, which separates expansion from contraction. The index has stayed in expansion territory for the 63rd consecutive month.
India’s domestic market remained the main source of sales growth, while the rate of expansion in new export business slowed to its weakest since February 2023, according to S&P Global.
“India’s services PMI rose to 55.8 in October, a four-month high, as business conditions improved cautiously. Although overall demand remained fairly strong, new export orders recorded the slowest pace of expansion since February 2023. Employment growth also slowed to its weakest pace since June, suggesting that some service sector businesses have sufficient capacity to meet current staffing requirements,” said Pranjul Bhandari, chief India economist at HSBC.
Input cost inflation eased to its slowest pace in more than six years, with the mildest increase recorded in the finance and insurance segment. Consumer services was the only segment to report a faster rise in input prices than in September, the survey said.
Selling prices charged by service providers also rose at their slowest pace since June, with fewer than 3 per cent of firms increasing their prices, S&P Global said.
“Meanwhile, input and output prices continued to rise, but at a slower pace than in the previous month, signalling some relief from inflation pressures. India’s composite PMI increased to 56.2 in October, from 55.9 in September, marking the fastest rise in aggregate output in four months and reflecting healthy business activity,” Bhandari added.
The improvement in services contrasted with the manufacturing sector, where the PMI eased to 54.7 in October from 55.1 in September, after reaching a seven-month high in September.
The HSBC India Composite PMI Output Index, a weighted average of the Manufacturing Output Index and the Services Business Activity Index, rose to 56.2 in October from 55.9 in September. The increase reflected faster growth in services activity, with aggregate output rising at its fastest pace in four months, the survey said.
At the composite level, new business expanded at a faster pace in October, while job creation moderated. Cost pressures eased across both manufacturing and services, bringing the aggregate inflation rate to an 11-month low.
