India's services sector gained momentum in October, with the PMI rising to 55.8 as input cost inflation eased to its lowest level in over six years.
India's services industry recorded stronger business activity in October, achieving its fastest expansion in four months. According to data released by S&P Global, the HSBC India Services Purchasing Managers' Index (PMI) increased to 55.8 in October from 55.2 in September.
The latest reading indicates continued growth in the services economy, supported by improving customer demand, new business opportunities and successful marketing activities. At the same time, input cost inflation declined to its lowest level in more than six years, offering some relief to service providers.
The HSBC India Services Business Activity Index climbed to 55.8 in October, compared with 55.2 in the previous month.
A PMI reading above 50 indicates expansion in business activity, while a reading below 50 signals contraction. The latest figures suggest that India's services sector maintained its positive growth momentum during the month.
October's performance also marked the strongest expansion recorded in the sector in four months.
According to the survey, improved demand conditions, the addition of new clients and effective advertising strategies contributed to higher business activity across the industry.
New business generation remained an important driver of the services sector's performance in October. The survey indicated that fresh orders increased at the fastest pace since June, reflecting stronger customer interest and improved demand for services.
All four broad service categories covered by the survey reported faster growth in output and new business compared with the previous month.
Among these segments, finance and insurance emerged as the leading contributors to the overall expansion.
The improvement suggests that service providers continued to benefit from stronger domestic demand and their ability to attract new customers.
One of the key developments in October was the significant moderation in input cost inflation. The survey showed that the pace of increase in input prices slowed to its weakest level since August 2020, marking a more than six-year low.
Lower input cost pressure could provide some relief to businesses facing expenses related to operations, resources and service delivery.
The rate at which service providers increased prices charged to customers also moderated. Selling price inflation declined to its weakest level since June.
This indicates that businesses faced relatively lower cost pressures and adopted a more moderate approach towards passing expenses on to customers.
Despite stronger overall business activity, certain indicators showed signs of moderation. Growth in new export orders slowed to its weakest pace since February 2023, suggesting that demand from international markets was less robust during October.
Employment growth also lost some momentum. Service providers continued to add workers, but the pace of job creation moderated to its slowest level since June.
These developments indicate that while domestic business conditions improved, some areas of the services industry continued to face challenges.
The improvement was not limited to the services sector. India's broader private sector also recorded stronger business activity during October. The HSBC India Composite PMI Output Index increased to 56.2 from 55.9 in September, reaching a four-month high.
The composite index tracks business activity across both manufacturing and services, providing a broader picture of India's private sector performance.
The latest reading indicates that the overall business environment strengthened during the month, supported by improved activity across major industries.
Despite stronger output and improving demand, service providers remained measured in their expectations for the coming year. Businesses continued to express optimism about their prospects over the next 12 months, although confidence remained cautious.
Improved customer demand and lower input cost inflation could support business performance in the coming months. However, slower export order growth and moderating employment expansion remain important indicators to monitor.
The October PMI figures suggest that India's services industry continues to demonstrate resilience, supported by domestic demand and improving operating conditions.
Conclusion
India's Services PMI rising to 55.8 in October highlights stronger growth momentum in the country's services economy. The six-year low in input cost inflation offers additional relief to businesses, although slower export orders and employment growth indicate that some challenges remain.