Growth in India's services sector climbed to a four-month high in October, a new survey showed, mainly driven by robust domestic demand and an increase in new business orders.
The HSBC India Services Purchasing Managers' Index (PMI) rose to 55.8 in October from 55.2 in September. However, it came in slightly below the preliminary estimate of 56.2. A reading above 50 indicates expansion in the sector.
Key Points
- The services PMI rose to 55.8 in October.
- While domestic orders surged, export orders dropped due to weak international demand.
- The pace of job creation slowed to a 10-month low.
- The overall composite PMI covering both manufacturing and services rose to 56.2.
International orders and hiring slow down
Although the intake of new business orders grew at its fastest pace since June, it was primarily driven by domestic demand. Demand from international markets weakened considerably, with growth in new export orders recording its slowest pace in 45 months.
Meanwhile, new hiring slowed significantly, with employment growth dropping to its lowest level in 10 months.
Input costs and overall growth
Inflationary pressures eased, with companies raising prices charged to consumers at the slowest rate in four months. The rise in operating expenses slowed to its lowest level in over six years, though firms noted that costs for electricity, labour, raw materials and transport were still rising.
Although business confidence weakened compared to September, the overall composite PMI, which covers both manufacturing and services, rose from 55.9 in September to a four-month high of 56.2 in October.
