India's vibrant services sector experienced a noticeable slowdown in October, with growth easing to its weakest pace in five months, according to the latest HSBC India Services PMI Business Activity Index. The dip comes as businesses grapple with the dual challenges of extreme weather conditions and intensifying market competition.
Key Findings from the October PMI Report
The seasonally adjusted HSBC India Services PMI Business Activity Index fell from 61.0 in September to 58.4 in October. While this figure still indicates expansion—as any reading above 50 signifies growth—it marks the slowest pace of expansion since May this year.
Several factors contributed to this moderation:
- Heavy monsoon rains disrupted business operations across multiple regions
- Intense competitive pressures affected market dynamics
- New business growth softened compared to previous months
- Employment generation showed only marginal improvement
Business Sentiment Remains Positive Despite Challenges
Despite the growth moderation, business optimism for the year ahead remained strongly positive. Firms cited advertising, capacity expansion plans, and favorable demand trends as reasons for their confidence in future output.
"The Indian services sector experienced a moderation in growth momentum in October, primarily due to intense rainfall and competitive conditions," noted Pranjul Bhandari, Chief India Economist at HSBC.
Inflation Trends and Pricing Power
On the inflation front, the report revealed mixed signals. While input costs rose at the slowest pace in over three years, firms continued to increase their selling prices, suggesting they maintained some pricing power despite competitive pressures.
The composite PMI output index, which measures combined services and manufacturing output, also declined from 61.0 in September to 58.4 in October, reflecting the broader economic moderation.
