Blitz Bureau
NEW DELHI: Growth in India’s services sector cooled in September due to weaker overseas orders, yet it remained strong and optimism improved, shows a latest survey.
The HSBC India Services Purchasing Managers’ Index, compiled by S&P Global, fell to 60.9 in September from a 15-year high of 62.9 in August, lower than a preliminary estimate of 61.6. Any reading above 50.0 indicates growth in activity.
Despite losing momentum from multi-year high growth in August, business activity continued to expand robustly and was the second highest in 13 months.
Firms linked the sustained growth to still buoyant demand and tech investment, although some reported facing headwinds from heightened competition and cost-control measures.
The new business sub-index, despite falling from August, remained strong marking the second-fastest expansion since August 2024.
An index measuring international demand for Indian services weakened considerably with export orders rising at the slowest pace since March. Companies cited price competition from overseas providers as a key factor restraining growth in foreign sales.
Still, business confidence regarding the year ahead improved to a six-month high. Firms cited planned advertising campaigns, expected efficiency gains, competitive pricing strategies and anticipated tax cuts as reasons for optimism.
However, employment growth maintained a modest pace in September, with fewer than 5 per cent of surveyed companies reporting new hiring.
Both input cost pressures and price increases charged by service providers eased from August. Firms passed on extra costs to their consumers at the shallowest rate since March.
Inflation rose in August to 2.07 per cent from July’s 1.61 per cent, ending a nine-month streak of decline. But it was well within the Reserve Bank of India’s (RBI) target range of 2-6 per cent. The RBI held its key repo rate at 5.50 per cent at the meeting on October 1.
The HSBC India Composite PMI Output Index, which includes both manufacturing and services, fell to 61.0 in September from 63.2, its lowest reading in three months but still indicating strong overall expansion.
The composite figures indicated softer growth across both sectors, reporting slower increases in new orders and output during September.