India's services sector sustained a strong growth trajectory in November, with the HSBC India Services Purchasing Managers' Index (PMI) recording 58.4, slightly lower than October's 58.5 but well above the long-term average. This expansion, highlighted by an unprecedented surge in employment, is attributed to resilient demand and robust new business growth, according to a survey conducted by S&P Global.
Employment reaches new heights
The PMI survey revealed the fastest employment growth since its inception in December 2005. Both permanent and temporary staff hiring drove this milestone, reflecting rising confidence among service providers due to increased demand and optimism about future business activity.
“November was a landmark month for India’s service sector, as employment rose at a record pace supported by buoyant business conditions and sustained international demand,” noted Pranjul Bhandari, Chief India Economist at HSBC.
International orders shine
New export orders rose at the fastest rate in three months, driven by demand from key markets in Asia, Europe, Latin America, and the US. The overall growth in sales was steady despite a slight softening from October.
Inflationary pressures persist
While growth remained robust, the sector grappled with intensifying cost pressures. Input costs, primarily fueled by rising food and wage expenses, rose at their steepest pace in 15 months. Correspondingly, service providers increased their selling prices at the fastest rate in nearly 12 years.
Sectoral activity and confidence
November also saw a pick-up in unfinished work, reflecting higher capacity utilization among firms. Service providers expressed the strongest business confidence since May, citing expectations of continued demand strength and enhanced marketing efforts.
Composite PMI indicates broader resilience
The HSBC India Composite PMI, which combines manufacturing and services data, was recorded at 58.6 in November, slightly below October's 59.1. While the manufacturing sector saw a more pronounced slowdown in growth, the services sector remained the primary contributor to overall economic expansion.
Outlook
With demand and job creation maintaining momentum, India's service sector is positioned for continued growth. However, the industry must navigate elevated cost pressures to sustain its competitive edge.
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