The growth rate of India’s services sector decreased in September from the recent peak observed in August, as new business and activity expanded at a slower pace, according to a monthly survey published on Monday. The seasonally adjusted HSBC India Services PMI Business Activity Index dropped to 60.9 in September, down from a 15-year high of 62.9 in August, influenced by competitive market conditions and cost-control measures. Despite this decline, the September Services PMI index remained significantly above the neutral level of 50.0, indicating ongoing substantial growth in output. In the context of the Purchasing Managers’ Index (PMI), a score above 50 signifies expansion, while a score below indicates contraction.
“Business activity in India’s services sector eased in September from the recent high in August. While most indicators showed moderation, there is no significant indication of a major loss in growth momentum within the services sector,” noted Pranjul Bhandari, Chief India Economist at HSBC. The survey indicated that part of the deceleration was due to a decline in international demand for Indian services. Although external sales increased in September, the growth was the slowest since March. Companies attributed the slowdown in export order growth to the availability of services at lower prices from other sources.
Regarding pricing, the report indicated that inflation was modest, marking the slowest pace since March and aligning with the long-term average, as prices for Indian services also rose at a reduced rate in September. The survey also revealed a slowdown in job creation during September, with employment increasing at a modest rate, as fewer than 5 percent of surveyed companies reported growth in hiring.
