HSBC India Services PMI September: Growth Slows Amid Softer Export Demand
Service sector companies reported a further increase in costs, primarily from labour and materials, yet the rate of inflation eased from the previous month and remained below the long-term average.
India’s service sector continued to expand in September, although the pace of growth moderated across key indicators, according to the latest HSBC India Services PMI report.
New business, overall activity, exports and employment all rose, but at softer rates compared with August. Encouragingly, easing cost pressures helped limit charge inflation, while business sentiment for the year ahead strengthened.
Business Activity Index Moderates
The seasonally adjusted HSBC India Services PMI Business Activity Index fell to 60.9 in September from 62.9 in August. Despite the drop, the figure remained well above the neutral mark of 50.0, signalling a substantial upturn in output.
Analysts attributed the rise to buoyant demand, gains in new business, technology investment, and supportive public policies. Constraints identified by respondents included competitive pressures and cost-control measures.
Slower Growth in New Orders and Exports
New order intakes continued to rise at a sharp pace, though slower than in August. The moderation was partly due to weaker international demand for Indian services. Export orders expanded in September, but the pace was the slowest since March. Firms cited competitive pricing and cheaper services elsewhere as key factors limiting growth in overseas sales.
Inflation Trends Ease
Service sector companies reported a further increase in costs, primarily from labour and materials, yet the rate of inflation eased from the previous month and remained below the long-term average.
Prices charged for services also increased at a more modest rate, the slowest since March, aligning broadly with long-run trends. Capacity pressures were limited, with outstanding business volumes rising at a marginal pace, the weakest in a year.
Employment and Optimism
Job creation slowed in September, with employment rising at a modest pace and fewer than 5 per cent of companies reporting hiring growth. Despite this, overall sentiment improved, reaching a six-month high. Firms cited factors such as advertising, efficiency improvements, competitive pricing strategies, and tax cuts as key drivers of optimism for the year ahead.
Composite PMI Reflects Broader Private Sector Trends
The HSBC India Composite PMI Output Index, combining manufacturing and services, slipped from 63.2 in August to 61.0 in September, marking the softest expansion since June. While growth in new orders and overall output softened across both sectors, the index remained well above the long-term average.
Inflation trends were mixed: manufacturing saw faster rises in costs and selling prices, whereas services experienced slower increases in expenses and charges.
Pranjul Bhandari, Chief India Economist at HSBC, said: "Business activity in India’s services sector eased in September from the recent-high August level. Most trackers moderated but nothing in the survey suggested there is a big loss in growth momentum in services. Instead, the Future Activity Index rose to its highest level since March, indicating strengthening optimism among services companies about business prospects."
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