India’s services sector maintained strong momentum in October, though growth moderated slightly due to adverse weather and competitive pressures, according to the HSBC India Services PMI survey compiled by S&P Global.
The seasonally adjusted HSBC India Services PMI Business Activity Index came in at 58.9 in October, marginally higher than the previous reading of 58.8, but marking the slowest pace of expansion since May. Despite the moderation, the index stayed comfortably above the neutral 50.0 threshold — a signal that the sector continues to expand at a healthy pace .
Expansion driven by new orders and GST relief
Service providers reported continued improvement in operating conditions, supported by robust demand, greater client footfall, and relief from recent GST reforms. However, competition and heavy rains in parts of India constrained business activity growth .
The report noted that new business intakes rose sharply, albeit at the weakest rate in five months. International demand also improved for the eighth consecutive month, though at a slower pace compared to March levels.
Cost pressures ease; price hikes moderate
Input costs and output charges increased at the slowest pace in over a year, bringing relief to companies. Input costs rose at the weakest rate in 14 months, while output prices increased at the slowest pace in seven months, indicating receding price pressures following the GST reforms .
Employment and optimism remain stable
Hiring activity in the services sector rose slightly, with companies recruiting additional staff to meet delivery deadlines and handle new orders. However, the overall pace of job creation was the joint-softest in 18 months. Firms remained optimistic about business activity over the next year, buoyed by expectations of continued demand growth and strong marketing initiatives .
Expert commentary
Commenting on the data, Pranjul Bhandari, Chief India Economist at HSBC, said,
“India’s services PMI softened to 58.9 in October, representing the slowest pace of expansion since May. Competitive pressures and heavy rains were key contributors to the slowdown. However, the PMI remains well above the neutral level, and input costs rose at the slowest rate in 14 months, providing relief for firms.”
The India Composite PMI, which combines manufacturing and services activity, fell slightly from 61.0 in September to 60.4 in October, largely due to the slower expansion in services.
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