India's crucial services sector witnessed a moderation in its growth momentum during October, though companies reported the slowest rise in input costs in over three and a half years, bringing some relief on the inflation front.
The HSBC India Services PMI Business Activity Index, compiled by S&P Global, dipped to 60.5 in October from 61.0 in September. While this indicates a slight cooling from the previous month's pace, it still represents one of the strongest growth rates seen since mid-2023.
Key Highlights from October's Services PMI
Business Activity & New Orders: Both business activity and new work intakes expanded at a softer, yet still robust, rate compared to September. The sustained growth was primarily driven by favourable demand conditions and positive market dynamics.
International Front: In a positive development for India's external sector, new export orders saw their fastest increase in nine months. Firms reported stronger demand from clients across Asia, Europe, and North America.
Price Pressures Show Significant Easing
Perhaps the most encouraging news from the report was on the inflation front. The rate of input cost inflation decelerated markedly to its weakest level since February 2021.
Poonam Gupta, Chief India Economist at HSBC, noted: "The softening of input cost inflation to a 45-month low is a welcome development. This, coupled with strong demand conditions, allowed services firms to increase their selling prices at the slowest pace in 40 months."
Employment and Business Outlook
Despite the slight moderation in growth, services companies maintained a positive stance on employment, continuing to create jobs in October. The overall level of business confidence remained strongly positive, with firms optimistic about the year-ahead outlook for output.
The composite PMI output index, which measures combined services and manufacturing output, also eased to 61.0 in October from 61.5 in September, indicating that while growth remains healthy across both sectors, the pace has moderated slightly.
