India's services growth hits 4-month high
What's the story
India's services sector, a key driver of the economy, has witnessed its fastest growth in four months. The expansion was mainly attributed to improved domestic demand, according to a recent survey by HSBC. The India Services Purchasing Managers' Index (PMI) rose to 55.8 in October from September's 55.2, indicating robust growth despite weaker international orders and subdued hiring trends.
Demand surge
Domestic demand drives new business growth
The PMI survey revealed that new business, a key indicator of demand, grew at its fastest rate since June. This was largely due to strong domestic orders.
However, international demand remained subdued, with the growth in new export business matching its slowest pace in 45 months.
Employment growth in the services sector almost came to a standstill. The hiring rate matched June's pace, which was the slowest in 10 months.
Cost dynamics
Easing inflationary pressures
The PMI survey also showed that inflationary pressures have eased, with prices charged to customers rising at their slowest pace in four months.
Input cost inflation has also eased to its lowest rate in over six years.
However, companies continue to report higher costs for electricity, labor, raw materials, and transportation services.
Confidence dip
Cautious optimism about future growth prospects
The PMI survey found that business confidence has slipped from September and the index remains below its long-run average.
This indicates a cautious optimism about future growth prospects in the services sector.
Despite these challenges, the overall composite PMI index, which includes both manufacturing and services sectors, rose to its highest level in four months at 56.2 in October from September's 55.9.