New Delhi: India’s services sector activity expanded at the slowest pace in over two years in January amid softer increases in sales and output, a monthly survey said Wednesday.
The seasonally adjusted HSBC India Services PMI Business Activity Index fell from 59.3 in December to 56.5 in January — its lowest level since November
In the Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
“India’s services sector lost growth momentum in January, although the PMI remained well above the 50-break-even level. The business activity and new business PMI indices eased to their lowest levels since November 2022 and November 2023 respectively,” Pranjul Bhandari, Chief India Economist at HSBC, said.
In contrast to the trend for total new orders, there was a quicker increase in international sales. Survey participants noted gains from clients in Asia, Europe, the Middle East and the Americas. The overall rate of expansion hit a five-month high.
“… New export business partly countered the downtrend and continued to rebound from a dip in late-2024, in line with official data which showed India’s services exports shinning in December and capturing a larger share of global trade,” Bhandari said.
The survey noted that ongoing improvements in new business intakes and rising capacity pressures prompted service providers to recruit additional staff at the start of the last fiscal quarter.
According to them, full- and part-time positions had been filled. The rate of job creation accelerated from December and was among the fastest seen since data collection started in December 2005.
Service providers in India were confident of a rise in business activity over the course of the coming 12 months. Some of the reasons listed for upbeat forecasts include advertising, efforts to price competitively and new client enquiries.
On the price front, services companies noted another uptick in their expenses largely due to rising staff costs, but also greater food prices. As a result of rising cost burdens and demand resilience, prices charged for the provision of Indian services increased further at the start of 2025.
Meanwhile, India’s private sector economy lost some growth momentum in January, as a quicker increase in factory production was more than offset by a softer expansion in services activity.
The HSBC India Composite Output Index fell from 59.2 in December to a 14-month low of 57.7.
Composite PMI indices are weighted averages of comparable manufacturing and services PMI indices. Weights reflect the relative size of the manufacturing and service sectors according to official GDP data.
The HSBC India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies.
PTI
