India's services sector grows at 3-month high in September; Q2 growth weakest since March 2022

Indias services sector expanded at its fastest pace in three months in September to 552 amid strengthening domestic demand and new orders according to news agency PTIThe PMI survey suggested that Indias services sector continued to improve supported by strengthening domestic demand At the same time export business continued to expand although the pace of growth slowed Pranjul Bhandari Chief India Economist at HSBC saidThe seasonally adjusted HSBC India Services PMI Business Activity Index rose to 552 in September from 541 in August indicating the strongest uptick in the sector since JuneThe HSBC PMI measures the monthonmonth change in the combined output of Indias manufacturing and services sectors and is an economic indicator of the business environmentAccording to the Purchasing Managers Index PMI score above 50 means expansion while that below 50 denotes contractionThe growth in the service sector was led by increasing demand for digital solutions food insurance loans software transportation and tours and travel Besides international demand for Indian services improved with firms gaining from Germany the UAE the UK and the US However the PMI noted that in growth in new export business slowed to a moderate paceOn the hiring front improving order books and projects in the pipeline led to new recruitments during September however the rate of employment eased from AugustQ2 growth weakestHowever the expansion in September was still unable to lift the quarterly average above that seen in the previous periodIn fact growth over the second fiscal quarter was the weakest since the three months to March 2022 the report saidIn August while the service sector activity had expanded the overall pace of growth was the secondslowest recorded since March 2022 amid subdued bookings strong competition and reduced transport operationsInflation easesThe HSBC PMI further noted the cost pressures eased at the end of the quarter ended September with the rate of input price inflation falling to its weakest levels since November 2025 Selling price inflation too eased to its lowest level since June reducing the pressure on firms to increases their rates as per IANSInputcost pressures on service providers eased to a 10month low reducing the need to raise selling prices The outlook remained positive with service providers reporting improved expectations for future activity for the second consecutive month Bhandari saidGoing ahead Indian services companies remained optimistic about the year ahead supported by resilient demand and rising customer enquiriesHSBC India Composite PMI Output IndexThe HSBC India Composite PMI Output Index that covers both manufacturing and services increased to 559 in September from 543 in August reflecting the strongest expansion in private sector since JuneThe resumption of job creation in the manufacturing industry and sustained growth at service providers resulted in greater employment at the composite levelWith inputs from PTI and IANS