Indian service providers exhibited robust output growth in October 2024, recovering from September’s ten-month low. Participants in the HSBC India Services PMI survey by S&P Global attributed the expansion to strong domestic and international customer demand. Responding to optimistic sales outlooks, companies increased hiring at the highest rate in over two years.
Input costs rose sharply in October, the fastest in three months, largely driven by higher wages and food prices. This led firms to increase their selling prices to offset the rising expenses.
The HSBC India Services Business Activity Index, a seasonally adjusted measure based on a question about monthly business activity, rose from 57.7 in September to 58.5 in October, indicating accelerated growth above its long-term average of 54.1.
Strong demand and a steady sales pipeline fuelled the increase in business activity, with sales growth reaching historical highs. Data also indicated a rebound in new export sales, particularly from regions such as Africa, Asia, the Americas, the Middle East, and the UK.
Employment in the services sector grew at the fastest rate in 26 months, with 13% of survey participants reporting job additions, up from 9% in September. This hiring increase stemmed from a rise in new business, prompting firms to hire both full-time and part-time staff.
Job creation was further supported by capacity pressures, with outstanding business volumes rising for the thirty-fourth consecutive month, reaching the highest level since July. Input price inflation also climbed, mainly due to increased food and wage costs, although the rate remained below the long-term average. Consumer services faced the highest cost pressures among monitored sub-sectors.
Despite a slight decline from September, business sentiment remained positive in October. One-quarter of surveyed firms anticipated increased output over the next year, citing steady demand, marketing initiatives, and new customer inquiries. The majority, however, expected no change in current business levels.
The overall private sector activity in India saw accelerated growth at the beginning of the third fiscal quarter, with both manufacturing and services reporting increased output. The HSBC India Composite Output Index climbed from 58.3 in September to 59.1 in October, signalling a rapid expansion rate.
New business inflows expanded across manufacturing and services, bolstering sales and employment growth in the private sector. While goods producers outpaced service providers in terms of output and new business growth, service providers led in job creation.
Input cost inflation rates were similar across manufacturing and services, with October recording the fastest rise in three months. Likewise, the overall charge inflation rate reached a three-month high.
Cover photo: OpenAI
