India’s services sector growth slows in September, optimism rises

Investing.com -- India’s services sector continued to expand in September, but at a slower pace compared to August, according to the latest HSBC India Services PMI data released Monday.

The seasonally adjusted HSBC India Services PMI Business Activity Index registered at 60.9 in September, well above the neutral mark of 50.0 but down from 62.9 in August, indicating a moderation in growth momentum.

Companies attributed the ongoing expansion to demand buoyancy, new business gains, technology investment, and favorable public policies. However, competitive conditions and cost-control measures were cited as barriers to growth.

New order intakes increased at a sharp but slower pace compared to August. International demand for Indian services also grew at a reduced rate, marking the weakest expansion since March. Firms identified lower-priced services elsewhere as the main factor behind the slowdown in export orders growth.

Cost pressures eased in September, with the overall rate of inflation described as solid but below its long-run average. This helped moderate the increase in prices charged for services, which rose at the slowest pace since March.

Employment growth also decelerated during the month, with less than 5% of surveyed companies reporting hiring increases, resulting in a modest pace of job creation.

Despite the slowdown in various metrics, business optimism strengthened to a six-month high. Companies cited advertising, efficiency gains, plans to price competitively, and tax cuts as factors supporting their positive outlook.

"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," said Pranjul Bhandari, Chief India Economist at HSBC.

The HSBC India Composite PMI Output Index, which measures combined manufacturing and services activity, fell from 63.2 in August to 61.0 in September, indicating the weakest rate of expansion since June while still remaining well above the neutral mark.

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