The seasonally adjusted Business Activity Index remained comfortably above the 50-point mark that separates expansion from contraction, indicating stronger growth in output and new business.
Demand conditions, new client wins and successful advertising supported the increase in activity, with sales recording their fastest growth since June.
The easing of cost pressures provided some relief to service providers. Input prices increased at their slowest pace since August 2020, while the rate of increase in prices charged to customers slowed to its weakest level since June.
Pranjul Bhandari, Chief India Economist at HSBC, said, “India’s services PMI rose to 55.8 in October, a four-month high, as business conditions improved cautiously.”
“Although overall demand remained fairly strong, new export orders recorded the slowest pace of expansion since February 2023. Employment growth also slowed to its weakest pace since June, suggesting that some service sector businesses have sufficient capacity to meet current staffing requirements,” she added.
Domestic demand remained the main driver of sales growth during October. Although international sales increased, the pace of expansion was marginal and the weakest in nearly four years.All four broad service categories covered by the survey recorded faster growth in new business and output, with Finance and Insurance leading the expansion.
Some companies reported higher spending on electricity, labour, raw materials and transportation. However, fewer than 3 per cent of service providers increased their selling prices at the beginning of the third fiscal quarter, citing the pass-through of higher costs to customers.
The broader private sector also recorded stronger growth, with the HSBC India Composite PMI Output Index rising to 56.2 in October from 55.9 in September, marking its fastest expansion in four months.
The aggregate rate of inflation for goods and services also eased to its lowest level since February 2022.
Looking ahead, service providers remained confident of higher output over the next 12 months, although business optimism weakened in October and remained below its long-term average.