India’s services sector regained momentum in November, showing faster expansion than in October as new business inflows strengthened and price pressures eased to multi‑year lows.
The latest HSBC India Services PMI Business Activity Index rose from 58.9 in October to 59.8 in November, indicating a historically sharp rise in output.
Survey respondents attributed the upturn largely to renewed demand conditions and a quicker pick‑up in new work. While total new business recorded a robust increase, export orders grew at a slower pace, easing to an eight‑month low, with firms citing intense overseas competition.
Softer Input Costs Support Growth
Underlying data highlighted a rare moment of relief on the cost front for services firms. Input cost inflation, covering expenses such as electricity, food, rent and software subscriptions, retreated to its lowest level in nearly five‑and‑a‑half years, staying below the long‑run average.
With cost pressures easing, companies raised their selling prices only marginally. The overall rate of charge inflation fell to its weakest level in more than four years, suggesting that firms leaned towards competitive pricing in a bid to secure new contracts.
Jobs Rise Moderately
Employment in the services economy increased again in November, although hiring remained modest and broadly similar to the pace seen in the previous two months. Survey data showed that low backlogs and minimal pressure on capacity were among the factors limiting stronger job creation.
Meanwhile, business confidence softened, reflecting concerns around competition and potential disruptions linked to state assembly elections. Nevertheless, firms stayed optimistic about output growth over the coming year, supported by improved demand, marketing plans, greater use of social media, and efforts to keep price hikes to a minimum.
Input Cost Rises At Slowest Pace In Over 5 Years
The broader private sector also registered sturdy activity, though growth moderated from October. The HSBC India Composite PMI Output Index slipped from 60.4 in October to 59.7 in November, signalling the slowest expansion since May, but still well above long‑term trends.
Aggregate new orders increased sharply but at the weakest rate in six months. Manufacturing growth eased, while services saw renewed acceleration.
Crucially, the private sector recorded a widespread slowdown in input cost inflation. The rise in expenses was the weakest in 64 months, helped by easing cost pressures at both goods producers and service firms. This contributed to lower output price inflation across the economy, which fell to an eight‑month low.
Pranjul Bhandari, Chief India Economist at HSBC, pointed out, “International sales expanded at an eight‑month low due to fierce overseas services competition. Input price inflation reached its lowest rate in nearly five‑and‑a‑half years, resulting in negligible increases in selling charges. Employment growth remained modest with most companies reporting no change in payroll numbers. Meanwhile, India’s composite PMI remained strong, though it softened slightly to 59.7 in November, reflecting a slowdown in growth of factory production.”
What This Means Going Forward
With both manufacturing and service activity holding firm despite external headwinds, India’s economy enters the final fiscal quarter on a resilient footing. The cooling of input costs offers additional breathing room for companies and could support margins if demand remains steady.
However, softer overseas orders, geopolitical uncertainty and domestic electoral factors may influence sentiment in the coming months.
