India’s services sector continued to show strong growth in November, with the HSBC India Services PMI registering 58.4, slightly lower than the expected 59.2 and down from October’s 58.5. Despite the steepest price increase in over a decade, demand remained strong, boosting business sentiment and leading to record hiring levels.
The index, compiled by S&P Global, indicated nearly unchanged conditions in November, with a slight drop from the preliminary estimate. The demand sub-index, which tracks new business, fell slightly but showed no significant signs of weakness, supported by strong international demand.
Optimism about future activity was high, with businesses predicting strong demand ahead, resulting in the highest future activity sub-index in six months. The rise in demand led to the fastest hiring rate since the survey began in 2005, reflecting improved confidence in the sector.
Increased hiring could help boost consumption, which had slowed in recent months and weighed on GDP growth, which eased from 6.7% in Q2 to 5.4% in Q3. However, the Reserve Bank of India is expected to maintain its policy stance until early next year, as inflation surpassed the RBI’s target in October.
Inflation also affected the PMI, with costs rising at their fastest rate in 15 months due to higher labor and material expenses. Companies passed on these increased costs to customers, leading to the biggest price hike in nearly 12 years.
Meanwhile, India’s manufacturing PMI fell to 56.5, and when combined with the slight dip in services activity, the Composite PMI dropped to 58.6 in November from 59.1 in October.
