India’s services sector growth falls marginally in November
- The HSBC India Services Purchasing Managers’ Index (PMI), came in at 58.4 in November, down from 58.5 in October but higher than the 57.7 figure reported in September.
New Delhi: India’s services sector growth fell slightly in November from the previous month, owing to a drop in growth of new orders and output, a survey released on Wednesday showed.
The HSBC India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, fell to 58.4 in November from 58.5 in October, but was higher than the 57.7 figure reported in September. It has been above the 50-point threshold that distinguishes expansion from contraction for more than 40 straight months. The index surged to 60.9 in August but has been below that ever since.
The survey, which gathered responses from around 400 service sector firms, revealed that ongoing improvements in sales led to increased capacity at companies and boosted job creation.
The downside to this was an intensification of price pressures, with input costs seeing their highest increase in 15 months and selling prices increasing at their fastest rate in almost 12 years.
"Total sales increased at a softer pace than in October, but the respective seasonally adjusted index was nevertheless more than four points above its long-run average and consistent with robust growth," the survey said. "New export orders increased at a solid rate that was the quickest in three months, but well below those seen around mid-year," it added.
The survey noted that growth was reported from clients in Asia, Europe, Latin America and the US.
Growth momentum
The services sector—a cornerstone of India’s economy—contributes more than half of the country’s GDP. India's economy surged 8.2% in FY24, bolstered by a 7.8% expansion in the January-March quarter and surpassing the Reserve Bank of India’s projected 7% growth rate for the fiscal year.
However, GDP growth softened to 6.7% in Q1 FY25, its slowest pace in five quarters following a 7.8% increase in the preceding quarter, according to the statistics ministry. GDP growth further slowed to 5.4% during Q2 FY25 owing to a slowdown in manufacturing and urban consumption, and disappointing corporate earnings.
"During November, services sector employment notably grew at the fastest pace ever recorded since this survey began in 2005. The hiring surge reflected the sector’s improving business confidence, growing new orders, and vigorous international demand," said Pranjul Bhandari, chief India economist at HSBC. "At the same time, high food and labour costs drove input and output prices to their fastest rates in 15 months and nearly 12 years, respectively," Bhandari added.
Manufacturing growth
India's manufacturing growth slowed in November, with activity easing to its lowest level in 11 months as price pressures and softer domestic demand weighed on the sector.
The HSBC India Manufacturing PMI, also compiled by S&P Global, came in at 56.5 in November, down from 57.5 in October and matching the level recorded in September.
Composite Output Index
The HSBC India Composite Output Index, a gauge of the combined services and manufacturing output, fell to 58.6 in November from 59.1 in October, though it remained above the 58.3 figure reported in September.
"The goods-producing sector recorded a larger slowdown in growth, but still posted a faster increase than the services economy. The same trend was evident for new orders," the survey noted. "Service providers signalled sharper cost pressures than manufacturers, and subsequently recorded a steeper increase in selling prices," it added.
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Business NewsEconomyIndia’s services sector growth falls marginally in November
First Published:4 Dec 2024, 02:46 PM IST
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