India’s services sector expanded at its quickest pace in four months in October, with the HSBC India Services PMI rising to 55.8 from 55.2 in September, according to data compiled by S&P Global and released on 4 November. A reading above 50 indicates expansion, and the October figure, based on responses from around 400 service companies, stayed comfortably above that mark and above its long-term average.
The headline number tells only part of the story. The survey’s detail shows a two-speed services economy: domestic demand doing the heavy lifting, while export orders and hiring lost momentum. New business from within India drove the improvement, as improved domestic demand boosted sales. New export orders, by contrast, expanded at the slowest pace since February 2023, a sign that global demand remains soft even as the home market holds up.
That domestic resilience matters for the Reserve Bank of India as much as the headline. Input cost inflation for service providers rose at the slowest pace since August 2020, the survey showed, while prices charged for services rose at the weakest pace since June. Easing cost pressures, if sustained, give the central bank more room to focus on growth, and they suggest that the services inflation that has worried policymakers may be moderating.
The broader composite PMI, which combines manufacturing and services, also improved, climbing to 56.2 in October from 55.9 in September. That was the quickest rise in overall private-sector output in four months, tracking healthy business activity across the economy. Manufacturing, however, moved in the opposite direction in October, with its PMI slipping to 54.7, so services carried the composite higher.
HSBC’s chief India economist Pranjul Bhandari said the services PMI improved cautiously, a phrase that captures the survey’s mixed tone. The expansion is real, but it is not broad-based in the way a strong export-led upturn would be. Hiring turned subdued, the survey found, as firms held back on adding staff while international orders weakened. For a sector that employs tens of millions of Indians, from IT and finance to hospitality, transport and retail, the hiring signal will be watched closely in the months ahead.
The October reading continues a steady climb from 54.1 in August to 55.2 in September and now 55.8, two consecutive months of improvement. It came in slightly below the flash estimate of 56.2, a reminder that early estimates can overstate the final picture, but the direction is consistent. Services, which account for more than half of India’s economy, are growing faster than they were in the summer, and they are doing so on the back of Indian consumers and businesses rather than foreign orders.
What happens next depends on whether domestic demand can sustain that pace through the festive season and into the winter, and whether export orders recover as global conditions stabilise. For now, the survey offers a cautiously positive read on the economy’s largest sector: growth at a four-month high, costs rising at their slowest in six years, and a domestic market strong enough to offset a weak world. That combination, if it holds, is the best news the services economy has had in some time.
