India services PMI rises to 55.2 in September amid demand recovery | Economy & Policy News

Growth in India’s services sector activity rose to a three-month high in September as new orders and international demand improved, according to a private survey released on Tuesday.

 

The HSBC India Services Purchasing Managers’ Index (PMI) rose to 55.2 in September from 54.1 in August.

 

“India’s service economy ended the second fiscal quarter on a stronger footing than it started, as improving sales performance lifted growth of business activity to a three-month high,” the survey said.

 

The September reading was above the 50 mark, which indicates expansion in activity, while a number below 50 signifies contraction. The headline figure has remained in the expansion zone for the 62nd consecutive month.

 

Increased demand from digital solutions, food, insurance, loans, software, transportation, tours and travel led to an expansion in services sector activity in September, the survey said.

 

New orders saw a sharp upturn in September, rising at the fastest pace in three months. Of the sub-sectors tracked by the index, finance & insurance and consumer services recorded the highest expansion.

 

The four major segments tracked are consumer services, finance & insurance, real estate & business services, and transport, information & communication.

 

“The PMI survey suggested that India’s services sector continued to improve, supported by strengthening domestic demand. At the same time, export business continued to expand, although the pace of growth slowed,” said Pranjul Bhandari, chief India economist at HSBC.

 

International demand improved, but growth of new export business eased to a moderate pace that was the slowest in close to three years, the survey noted.

 

Improving order books and projects in the pipeline prompted service providers to recruit extra staff during September. However, employment rose at a moderate rate and at a slower pace compared to August. “The slowdown largely reflected softer hiring among real estate & business services firms,” S&P said.

 

Cost pressures subsided at the end of the second fiscal quarter, with the rate of input price inflation retreating to its weakest since November 2025, the survey noted. The slowdown was broad-based across all four service categories monitored by the PMI survey.

 

“Where costs increased, panel members cited higher prices for food supplies, fuel, insurance premiums, maintenance, software and technology resources,” the survey said.

 

Some of the surveyed companies passed on the higher expenses to customers by raising their fees. However, the overall rate of final price inflation remained moderate and eased to the lowest since June.

 

At the sub-sector level, increases in selling prices slowed in finance & insurance and real estate & business services, but quickened in consumer services and transport, information & communication, the survey said.

 

“Input-cost pressures on service providers eased to a 10-month low, reducing the need to raise selling prices. The outlook remained positive, with service providers reporting improved expectations for future activity for the second consecutive month,” Bhandari said.

 

The recovery in services mirrored the manufacturing sector, where the PMI rose to a seven-month high of 55.1 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 55.9 in September from 54.3 in August as both sectors saw a recovery.

 

Aggregate sales across both the manufacturing and services sectors picked up pace in September, but this growth was still the weakest since the end of fiscal year 2021-22.

 

“Meanwhile, the reinstatement of job creation in the manufacturing industry and sustained growth at service providers resulted in greater employment at the composite level,” the survey said.