India's services sector growth slows to 5-month low in October
What's the story
India's services sector growth has slowed down in October, hitting a five-month low of 58.9, according to a private sector survey released today. The HSBC Services Purchasing Managers's Index (PMI) fell from September's 60.9 to this month's reading, marking the first decline below the 60 mark since June and only the third time this year.
Sector performance
Manufacturing sector rebounds, outpaces services growth for first time
The slowdown in the services sector comes as a contrast to a rebound in manufacturing. The HSBC Manufacturing PMI rose from 57.7 in September to 59.2 this October, driven by festive demand and GST rate cuts. Interestingly, this is the first time in nine months that the manufacturing sector has outpaced services growth, indicating a shift toward industrial activity as we enter Q3 of FY26.
PMI analysis
Services PMI remains above neutral mark for over 4 years
The HSBC India Services PMI, which surveys around 400 companies in consumer services (excluding retail), transport, information and communication, finance, insurance, real estate and business services sectors, fell to 58.9 in October from September's 60.9 and August's record high of 62.9. Despite the slowdown in growth due to factors like softer export demand and rising global competition, the index has remained above the neutral mark of 50 for over four years now.
Future outlook
Companies optimistic about future business activity
Despite the moderation in growth, companies are optimistic about future business activity. The survey noted that while input costs and selling prices have risen at a more measured pace, firms remain confident of an increase in business activity over the next 12 months. Competitive pressures and heavy rains were cited as reasons for this sequential slowdown, but the optimism stems from the overall resilience and future prospects.