India’s services sector sees strongest pace of growth in 4 months: PMI data

New Delhi: Demand buoyancy fuelled growth of business activity and new orders across India's service economy in the month of October, as HSBC PMI came at 55.8 on Wednesday, rising from 55.2 in September which is the strongest pace of growth for four months.

The Services PMI was comfortably above the neutral mark of 50.0 and its long-run average. Encouragingly, input cost inflation retreated to its lowest mark since August 2020. Concurrently, prices charged for the provision of Indian services rose at the weakest rate since June, according to the PMI data.

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.

“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,” said Pranjul Bhandari, Chief India Economist at HSBC.

Meanwhile, input and output prices continued to rise, but at a slower pace than in the previous month, signalling some relief from inflation pressures, she mentioned.

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.

Underlying data showed that India's domestic market was the main source of sales growth in October.

When assessing growth prospects, service providers were confident of a rise in output over the course of the coming 12 months, said the PMI data.

Meanwhile, the latest results showed that services companies made inroads into their backlogs. Unfinished business volumes decreased for the third time in the past four months, albeit only moderately. Consequently, employment growth eased during October.

Inflationary pressures were less pronounced in the service economy than in the manufacturing industry, the data showed.

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