Services PMI In September Falls To Lowest Since November 2023

India's services PMI fell to a 10-month low in September amid lower export orders.

The seasonally adjusted HSBC India Services Business Activity Index fell from 60.9 in August to 57.7 in September, signaling a softer albeit still historically-robust rate of expansion. A figure above 50 denotes expansion.

With both factory production and services activity rising at slower rates, the HSBC India Composite Output Index fell from 60.7 in August to 58.3.

Several panellists attributed the increase in output to new business gains, positive demand trends and investment in technology. Growth was reportedly curbed by fierce competition, cost pressures and changes in consumer preference (that is, switch to online services).

Similarly, new business intakes expanded sharply at the end of the second quarter, but the pace of growth retreated to a 10-month low.

Where an increase was noted, survey participants remarked on healthy demand conditions. Those that experienced challenges commented on fresh entrants and greater competition.

One factor that constrained total sales growth was a softer increase in new export orders, the survey said. The rate of expansion moderated to the weakest in 2024 so far.

Largely reflecting expectations that demand conditions will remain favourable in the year ahead, businesses were more confident in the outlook for output. Moreover, the overall level of positive sentiment rose from August. In some cases, optimism was supported by projects pending approval and efficiency gains.

The solid increase in services employment seen since May was extended to September. Service providers reported the recruitment of full- and part-time workers, with both permanent and temporary contracts being offered.

Fierce competition somewhat restricted charge inflation across India's service economy in September. Output prices still rose, but did so to the smallest degree in over two-and a-half years. This was in spite of a quicker increase in overall business expenses. That said, the overall rate of inflation remained below its long-run average.