India's crucial services sector displayed remarkable resilience and accelerated growth in November, according to the latest survey data. The seasonally adjusted HSBC India Services PMI Business Activity Index rose to 61.2 in November, up from 58.4 in October. This marks a significant strengthening of growth momentum, placing the index well above the critical 50.0 threshold that separates expansion from contraction.
Robust Demand Fuels Record-Breaking New Business
The primary engine behind this expansion was an exceptionally strong inflow of new orders. Firms reported the fastest increase in new business intakes since July, a trend attributed to favourable demand conditions, successful advertising, and a positive economic climate. This surge was not confined to the domestic market; international demand also played a key role. New export orders grew at the quickest pace in over a decade, with firms citing robust demand from clients across various regions including Africa, Asia, Europe, and the Americas.
Pranjul Bhandari, Chief India Economist at HSBC, highlighted the sector's robust health, stating, "The service sector accelerated in November, led by a faster increase in new orders, both domestic and external." This dual strength underscores the sector's expanding global footprint and competitive appeal.
Employment and Business Confidence Soar
The positive demand environment had a direct and favourable impact on the job market. In response to the growing workload and optimistic sales projections, service providers expanded their workforce numbers. The rate of job creation was the strongest recorded in six months, indicating a healthy transmission of economic growth into employment opportunities.
Furthermore, business sentiment regarding the year-ahead outlook reached an 11-month high. Companies expressed strong optimism about future business activity, driven by expectations of sustained demand, marketing initiatives, and a favourable political environment. This buoyant confidence is a key indicator of continued investment and expansion plans within the sector.
Inflation Trends and Future Outlook
On the inflation front, the survey presented a mixed picture. While the pace of increase in input costs for service providers softened slightly in November, it remained historically elevated. Firms continued to face rising expenses for materials, labour, and transportation. Despite this, the rate of output charge inflation—the prices charged to customers—accelerated to its highest level in three months. This suggests that companies are increasingly able to pass on some of their higher costs to consumers, protecting their profit margins.
The composite PMI index, which measures the combined performance of both the manufacturing and services sectors, also reflected this broad-based strength. The HSBC Composite PMI Output Index rose from 58.4 in October to 61.6 in November, signalling the fastest increase in private sector activity since December 2022.
Looking ahead, the strong finish to the third quarter of the fiscal year positions India's services sector as a central pillar of economic growth. The combination of vigorous new orders, rising employment, and soaring business confidence paints a picture of an economy firing on all cylinders. However, economists will be closely monitoring input cost pressures and their pass-through to consumers, as these factors will influence the Reserve Bank of India's monetary policy decisions in the coming months.
