India’s Services Growth Cools in September but Optimism Strengthens

India’s services sector growth eased in September as overseas demand weakened, though overall activity remained robust, according to the HSBC India Services Purchasing Managers’ Index (PMI) compiled by S&P Global. The index fell to 60.9 from August’s 15-year high of 62.9, slightly below the preliminary estimate of 61.6. Despite the slowdown, the sector continued to record one of its strongest expansions in over a year, driven by resilient domestic demand and ongoing investments in technology.

Firms attributed the sustained growth to buoyant local demand, even as they faced increased competition and cost pressures. The new business sub-index, though lower than August, reflected the second-fastest expansion since August 2024. However, international demand softened, with export orders rising at the slowest pace since March as price competition from overseas providers limited growth. Employment remained modest, with fewer than 5% of companies reporting new hires, while both input costs and selling prices eased slightly from August.

Business confidence among service providers rose to a six-month high, supported by expectations of tax cuts, advertising campaigns, and efficiency gains. Meanwhile, India’s inflation climbed to 2.07% in August, up from 1.61% in July, but stayed comfortably within the Reserve Bank of India’s 2–6% target range. The HSBC India Composite PMI Output Index, which combines manufacturing and services data, slipped to 61.0 from 63.2, indicating softer—but still strong—expansion across the broader economy.

Pic Courtesy: google/ images are subject to copyright