India’s services sector growth slows in September, but optimism hits 6-month high: HSBC PMI

The seasonally adjusted HSBC India Services PMI Business Activity Index fell to 60.9 in September from 62.9 in August, signaling a slower but still robust expansion in output.

In the Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

“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.

According to the survey, new business and output expanded at slower rates, while international sales recorded the weakest rise since March.

External sales still rose in September, but did so to the least extent since March. Companies identified the supply of services at lower prices elsewhere as the main factor behind the slowdown in the growth of export orders.

Employment in the sector also grew modestly, as fewer than 5% of firms reported hiring.

Outstanding business volumes rose only marginally, indicating limited pressure on capacity.

Meanwhile, companies' assessments of growth prospects improved in September, with the overall level of positive sentiment reaching a six-month high.

Survey participants identified several tailwinds to the year-ahead outlook for activity, including advertising, efficiency gains, plans to price competitively and tax cuts.

“The Future Activity Index rose to its highest level since March, indicating strengthening optimism among services companies about business prospects,” Bhandari added.

The survey also found that private sector growth softened last month. The HSBC India Composite PMI Output Index dropped to 61.0 in September from 63.2 in August, the weakest expansion since June. The figure nevertheless remained comfortably above its long-run average and the neutral mark of 50.0.

The HSBC India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies.