India’s Services Sector Growth Eases In October But Remains Firm Amid Strong Demand and GST Relief - Swarajyamag

India’s services sector witnessed slower growth in October but maintained overall strength, aided by steady demand and the Goods and Services Tax (GST) reforms, The Hindu Businessline reported.

According to S&P Global data, the HSBC India Services PMI dropped to 58.9 in October from 60.9 in September, reflecting the slowest growth since May.

The deceleration was attributed to higher cost competition and heavy rains in parts of the country led to a lower increase in output.

Despite the slowdown, the PMI score stayed well above the neutral level of 50, which marks the divide between growth and contraction.

The October figure also exceeded the long-run average of 54.3, highlighting sustained sectoral resilience.

"India’s services PMI softened to 58.9 in October, which represented the slowest pace of expansion since May. Competitive pressures and heavy rains were cited as contributors to the sequential slowdown,” said Pranjul Bhandari, Chief India Economist at HSBC.

According to the survey conducted among 400 service-sector firms, operating conditions improved due to strong demand and GST relief.

However, growth remained partially constrained by competition and weather disruptions, as reported by the HSBC India Services PMI compiled by S&P Global.

Overseas demand for Indian services continued to rise, reflecting another solid gain in exports. Yet, the pace of growth eased to its weakest level since March, according to the S&P Global survey.

Surveyed firms suggested that GST reforms helped ease inflationary pressures. Input costs and output charges increased at their slowest rates in 14 and seven months, respectively.

Businesses expressed confidence in higher activity levels over the next year, signalling optimism about future demand conditions.

To manage new business inflows and maintain service reliability, several firms expanded their workforce in October.

India’s overall economic activity, combining manufacturing and services, grew strongly in October but at a slower rate.

The HSBC India Composite PMI Output Index slipped from 61 in September to 60.4 in October, marking the softest rise since May.

"India’s composite PMI fell on a sequential basis from 61 in September to 60.4 last month, largely due to the slowdown in the services sector," Bhandari said.

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