India’s services PMI hits four-month high in October as demand picks up | Economy & Policy News

Growth in India’s services sector activity rose to a four-month high in October as input cost inflation eased and new business growth 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.

 

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

  

New business growth was the main driver behind the rise in output, with overall sales rising at the fastest rate since June, the survey said. Sales picked up due to favourable demand conditions, new client wins and successful advertising that boosted new order intakes.

 

The October reading was above the 50 mark, which indicates an expansion in activity, while a reading below 50 signifies contraction. The headline figure has remained in the expansion zone for the 63rd consecutive month.

 

India’s domestic market was the main source of sales growth, while the rate of expansion in new export business was the 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 over six years, with the softest rise in prices seen in the finance and insurance segment. Meanwhile, consumer services was the only segment to see a faster rise in input prices than in September, the survey said.

 

Final prices of services also rose at the slowest pace since June, with less than 3 per cent of service providers increasing their selling prices, S&P Global said.

 

Employment growth eased in October as job creation fell to its slowest pace in four months.

 

“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 recovery in services contrasted with the manufacturing sector, where the PMI dipped to 54.7 after rising to 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.

 

“Reflecting a faster increase in services activity, aggregate output rose to the greatest extent in four months,” the survey said.

 

While new business intake expanded faster in October at the composite level, job creation softened. Cost pressures receded for both manufacturers and service providers, dragging the aggregate inflation rate to an 11-month low.