India’s services sector activity expanded at its fastest pace in four months in October, with the HSBC India Services Purchasing Managers’ Index (PMI) rising to 55.8 from 55.2 in September, driven by stronger domestic demand and new business growth, according to data released by S&P Global on Wednesday.
The seasonally adjusted Business Activity Index remained above the 50-point mark that separates expansion from contraction, indicating continued growth in business output and new orders.
The improvement was supported by favourable demand conditions, new client acquisitions and successful advertising campaigns. Sales recorded their fastest growth since June.
The survey also indicated a moderation in cost pressures, with input price inflation easing to its lowest level since August 2020. The rate of increase in prices charged to customers also slowed to its weakest level since June.
Pranjul Bhandari, Chief India Economist at HSBC, said India’s services PMI reached a four-month high in October as business conditions improved cautiously.
She noted that while overall demand remained fairly strong, the growth in new export orders slowed to its weakest pace since February 2023. Employment growth also moderated to its lowest level since June, indicating that some service providers had sufficient capacity to meet existing staffing requirements.
Domestic demand remained the primary driver of sales growth during the month. Although international sales continued to increase, the pace of expansion was marginal and the weakest in nearly four years.
All four broad service categories covered by the survey registered faster growth in output and new business, with the finance and insurance segment leading the expansion.
On the cost front, some companies reported higher expenditure on electricity, labour, raw materials and transportation. However, fewer than three per cent of service providers increased their selling prices at the beginning of the third fiscal quarter, indicating limited pass-through of higher costs to customers.
The broader private sector also recorded stronger growth in October. The HSBC India Composite PMI Output Index, which measures activity across the manufacturing and services sectors, increased to 56.2 from 55.9 in September, marking its fastest expansion in four months.
The overall rate of input cost inflation across goods and services also eased to its lowest level since February 2022.
Looking ahead, service providers remained optimistic about an increase in business activity over the next 12 months. However, business confidence weakened during October and remained below its long-term average.
The October data point to sustained expansion in India’s services sector, supported by domestic demand and easing input cost pressures, even as export order growth and employment expansion showed signs of moderation.
-ANI
