India's Services Sector Hits 4-Month Growth High as Business Demand Picks Up

India's services sector recorded its fastest expansion in four months in October, driven by stronger demand and an increase in new business orders, while easing cost pressures provided further support to businesses.

The HSBC India Services Purchasing Managers' Index (PMI) rose to 55.8 in October, from 55.2 in September, marking the strongest growth since June. A reading above 50 indicates expansion in business activity.

The improvement was largely driven by increased new business, favourable demand conditions, fresh client acquisitions and successful advertising campaigns. However, growth in international orders slowed to its weakest pace since February 2023.

Input costs and selling prices continued to rise but at a slower rate than in September, indicating easing inflationary pressures. Overall cost pressures across India's manufacturing and services sectors declined to an 11-month low.

Employment growth remained subdued, with services companies increasing their workforce at the slowest pace in four months, suggesting that businesses had sufficient staff to meet current demand.

Meanwhile, India's Composite PMI, which tracks activity across manufacturing and services, increased to 56.2 in October, from 55.9 in September. It marked the fastest expansion in overall private-sector activity in four months, with new business orders growing at their strongest pace since June.