India’s services sector growth hits lowest level since November 2023

India’s services sector growth, measured by new business, international sales, and output, has slowed to its lowest rate since November 2023, according to the HSBC India Services PMI released on Friday. The survey, compiled by S&P Global, indicates that while the performance of the sector remains historically strong, the growth rate has moderated.

In September, the index value was above the neutral mark of 50.0, falling from 60.9 in August to 57.7. This decline signals a softer, yet still robust, rate of expansion. The PMI readings range from 0 to 100, with a figure above 50 indicating an increase compared to the previous month and below 50 indicating a decrease.

One factor limiting total sales growth was a slower increase in new export orders, which saw the weakest rate of expansion so far in 2024. However, some firms reported gains from regions including Asia, Europe, North America, the Middle East, and the US.

“The new business index followed a similar trajectory as the headline figure, indicating the possibility of softer output growth in the coming months. Services companies’ margins have likely been squeezed further, as prices charged rose at a slower pace when input cost inflation intensified. A long period of robust new business growth has led to strong labour demand,” said Pranjul Bhandari, Chief India Economist at HSBC.

Earlier PMI data revealed that India’s manufacturing sector also declined for the second consecutive month in September. This trend reflects a broader slowdown in the manufacturing sector, with the average PMI reading reaching its lowest level since the three months ending December 2023. The slowdown has been linked to several factors, including intense competition and a slower increase in new export orders. While demand trends remained positive, the pace of expansion has been constrained.

(ANI)