By Anjali Sharma
WASHINGTON – According to the HSBC India Services Purchasing Managers’ Index on Tuesday India’s services sector gained momentum in September, with business activity expanding at its fastest pace in three months as stronger demand and an increase in new orders supported growth
The services PMI climbed to 55.2 in September from 54.1 in August, remained comfortably above the 50-point mark that separates expansion from contraction.
The latest reading also marked the 62nd consecutive month of growth in the services sector.
The survey showed that domestic demand remained a key driver of the improvement, while international business also increased during the month.
New orders recorded their strongest growth in three months, with demand for digital services, food, insurance, lending, software, transport and travel contributing to the expansion.
Among the four categories covered by the survey, finance and insurance and consumer services recorded the strongest growth.
The other segments tracked were real estate and business services, and transport, information and communication.
“India’s service economy ended the second fiscal quarter on a stronger footing than it started,” the survey said, noting that improving sales helped push the growth of business activity to a three-month high.
HSBC Chief India Economist Pranjul Bhandari said the services sector continued to benefit from stronger domestic demand. However, while export business remained in expansion territory, the pace of growth in new international orders moderated in September.
The survey noted that international demand continued to rise, but new export business grew at a moderate pace, marking its slowest growth in nearly three years.
Improving order books and projects in the pipeline encouraged service companies to add employees during September. However, the pace of hiring moderated compared with August.
The slowdown was particularly evident among firms in the real estate and business services segment, the survey noted.
Cost pressures also eased during the month. Input-price inflation across the services sector fell to its weakest level since November 2025, with the moderation spread across all four categories tracked by the PMI.
Companies that reported higher costs cited increases in expenses related to food supplies, fuel, insurance premiums, maintenance, software and technology resources.
Some businesses responded by raising prices charged to customers. However, overall inflation in selling prices remained moderate and eased to its lowest level since June.
Price increases slowed in the finance and insurance as well as real estate and business services segments.
The consumer services and transport, information and communication companies reported faster increases in selling prices.
The improvement in services activity came alongside a stronger performance by India’s manufacturing sector. The manufacturing PMI rose to a seven-month high of 55.1 in September, according to the survey.
As a result, the HSBC India Composite PMI Output Index increased to 55.9 in September from 54.3 in August, reflecting a broad-based recovery across the private sector.
Aggregate sales across manufacturing and services accelerated during September. However, the pace of growth remained the weakest since the end of the 2021-22 financial year.
Employment conditions also improved at the composite level, supported by renewed job creation in manufacturing and continued hiring by service-sector companies.
Bhandari said input-cost pressures had eased to a 10-month low, reducing pressure on businesses to increase selling prices.
She added that sentiment around future activity improved for the second consecutive month, pointing to a positive outlook among service providers.
