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New Delhi, Oct 5 (KNN) India’s service sector activity has fallen to a ten-month low in September, as indicated by the latest HSBC India Services Purchasing Managers Index (PMI) compiled by S&P Global.
The index dropped to 57.7, down from 60.9 in August and significantly lower than the 61.8 recorded at the start of the year. While a PMI reading above 50 indicates expansion, this decline reflects a cooling in growth momentum.
Pranjul Bhandari, chief India economist at HSBC, noted that the new business index mirrored the headline figure’s downward trend, suggesting a potential slowdown in output growth in the months ahead.
The survey highlighted that service companies are facing tighter margins, as the pace of price increases has slowed amid rising input costs. This trend suggests that while demand for services remains, the overall growth dynamic is shifting.
The average PMI reading for the second quarter of the current financial year was 59.6, slightly lower than the 60.5 recorded in the first quarter.
Key factors contributing to this decline include a shift in consumer preferences towards online services and ongoing cost pressures faced by service providers.
Despite the slowdown, the sector has seen employment gains. Bhandari pointed out that sustained new business growth has fuelled strong labor demand, highlighting a positive aspect in an otherwise challenging environment.
Sector-wise, finance and insurance showed resilience, with increases in both output and new orders.
The decline in service activity corresponds with a downturn in manufacturing, which also hit an eight-month low in September.
This dip in manufacturing activity was driven by softer growth in exports and overall production. The HSBC India Composite Output Index, which combines manufacturing and services data, fell from 60.7 in August to 58.3, marking the slowest growth rate since November 2023.
The survey pointed to a ten-month low in new business growth, alongside the weakest growth in international sales recorded in 2024.
However, the private sector continues to demonstrate robust employment gains and a strengthening of business confidence since August.
Interestingly, services exports saw a notable increase of 11.7% to USD 119.5 billion in 2024-25 (as of July) compared to the same period last year, indicating that while domestic service activity may be slowing, the global demand for Indian services remains strong.
As the economic landscape shifts, stakeholders will be keen to monitor how these trends evolve in the coming months, particularly regarding consumer behaviour and cost management strategies.
(KNN Bureau)
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