India's services sector records four-month high growth in October

India's services sector has recorded its strongest growth in the last four months in the month of October. According to a report by 'The Hindu', there has been a surge in service sector activities due to cautious improvements in business conditions and an increase in demand. The HSBC India Services PMI Business Activity Index has risen from 55.2 in September to 55.8 in October. According to the PMI criteria, a figure above 50 indicates expansion, which shows that the service sector is continuously growing.

According to the companies included in the survey, the increase in new business is the main reason for this growth. Favorable demand, success in acquiring new customers, and effective advertising have led to a significant increase in new orders. HSBC's Chief India Economist Pranjul Bhandari stated that the services PMI reached 55.8 in October, which is a four-month high. However, she noted that despite strong overall demand, new export orders saw the slowest growth rate since February 2023.

There has been some relief on the price front. While input and output prices have increased, the pace has been slower than in previous months, indicating some relief from inflationary pressure. Additionally, cost pressures have eased in both the manufacturing and services sectors, causing the overall inflation rate to reach an 11-month low. Regarding job creation, this is the weakest rate since June, suggesting that some service sector companies have sufficient capacity to meet current requirements. Companies are cautiously optimistic about the future outlook and have made the lowest hiring in the last four months.

There has also been an improvement in the country's Composite PMI figures, which rose from 55.9 in September to 56.2 in October. This figure indicates the fastest increase in total output in the last four months. At the composite level, new business orders have seen the most significant increase since June. However, job creation has declined, and businesses appear less enthusiastic about growth prospects compared to September. The Composite PMI is a weighted average of the manufacturing and services sector PMIs, taking into account the size of both sectors according to government GDP data.

This HSBC India Services PMI is prepared by S&P Global. For this, feedback is obtained from a panel of approximately 400 companies in the service sector. Companies included in this survey described the expansion in international sales as the weakest in nearly four years. Overall, despite the strong performance of the services sector in October, companies are adopting a cautious stance on the employment and export fronts.