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India's services sector continued to expand in October, though the pace of growth eased to a five-month low, according to the HSBC India Services Purchasing Managers' Index (PMI) released on Thursday.
The index fell to 58.9 in October from 60.9 in September, remaining well above the neutral mark of 50 that separates growth from contraction. The report, compiled by S&P Global, said that while demand buoyancy and the recent GST reforms boosted business activity, competitive pressures and heavy rains constrained momentum. "India's services PMI softened to 58.9 in October, which represented the slowest pace of expansion since May," said Pranjul Bhandari, Chief India Economist at HSBC. "That said, the PMI remains well above its long-run average, and input costs increased at the slowest rate in 14 months, providing some relief for firms," she added. The survey showed that new business orders rose sharply but at the slowest rate in five months, reflecting the combined effect of increased competition and weather disruptions such as floods and landslides. Despite the moderation, companies cited continued strong domestic demand and effective marketing as key drivers of growth. International demand for Indian services also improved, with another increase in external sales, though the pace of expansion was the weakest since March. The survey pointed out that input cost inflation eased to its slowest level in over a year, aided partly by GST-related reforms that reduced certain cost burdens. As a result, selling prices increased at the slowest rate in seven months, offering further respite to businesses and consumers alike. Employment trends were broadly positive, as service providers hired additional staff to support new business and maintain delivery schedules. However, job creation remained modest, the joint-softest pace in 18 months. Sustained hiring helped reduce backlogs of work for the first time in nearly four years, though only marginally. Looking ahead, optimism in the services economy remained upbeat, underpinned by expectations of strong demand, enhanced advertising, and competitive pricing strategies. Nevertheless, the overall level of confidence slipped to a three-month low. The composite PMI, which includes both manufacturing and services activity, also moderated slightly to 60.4 in October from 61.0 in September, reflecting the services slowdown even as manufacturing expanded faster. The HSBC India Services PMI, compiled from responses of around 400 service sector firms, covers segments such as transport, finance, communication, and business services. Data for the October survey were collected between October 8 and 29, 2025. (ANI)
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