The HSBC India Services Business Activity Index posted a reading of 55.8 compared with 55.2 in September and 58.9 a year ago, data released on Wednesday showed. A reading above 50 indicates expansion in activity.
“India’s services PMI (Purchasing Managers’ Index) rose to 55.8 in October, as business conditions improved cautiously,” said Pranjul Bhandari, chief India economist at HSBC. In contrast, manufacturing activity in October showed a moderation, with the PMI easing to 54.7 from 55.1 in September.
Growth in services activity helped lift India’s composite PMI, which tracks both manufacturing and services, to 56.2 from 55.9 in September, indicating the fastest expansion in four months.
HSBC India Services PMI Business Activity Index
The survey showed that services firms were optimistic about output growth over the next 12 months, although business confidence weakened in October and stayed below its long-term average. New business remained the primary driver of higher output. Overall sales rose at their fastest pace since June, supported by favourable demand conditions, new client acquisitions and successful advertising campaigns.
All four broad segments of the service economy covered by the survey reported faster growth in new business and output. Finance and insurance led the expansion in both categories, while real estate and business services recorded the weakest performance. “Although overall demand remained fairly strong, new export orders recorded the slowest pace of expansion since February 2023,” said Bhandari.
On the cost front, input prices continued to rise in October, but only marginally, recording their slowest rate of increase in more than six years and remaining below the long-term trend. Some businesses, however, reported higher expenditure on electricity, labour, raw materials and transportation.”Input and output prices continued to rise, but at a slower pace than in the previous month, signalling some relief from inflation pressures,” said Bhandari.
Cost pressures were most pronounced in the consumer services segment–the only category that saw a faster increase in input prices compared with September. Finance & insurance recorded the softest rate of inflation.
Fewer than 3% of firms covered in the survey said they raised their selling prices at the start of the third quarter, as some businesses passed on the higher costs to customers. The overall rate of charge inflation was marginal and the slowest since June. Employment growth also moderated in October, easing to its slowest pace since June.