India’s services sector demonstrated strong performance in November, with the Services Purchasing Managers’ Index (PMI) recording a robust 58.4, a slight dip from October’s 58.5, according to a monthly survey released Wednesday. In PMI terms, a score above 50 indicates expansion, while below 50 signifies contraction.
The marginal decline reflected a softer pace of sales growth, though the sector maintained its momentum. Significantly, employment in services surged, with hiring growing at the fastest rate since the survey began in 2005. Pranjul Bhandari, Chief India Economist at HSBC, attributed this hiring surge to improving business confidence, growing new orders, and robust international demand.
The survey highlighted that international demand for services continued to strengthen, with new export orders increasing at the quickest rate in three months, though still below mid-year highs. Private sector companies noted that strong demand supported further growth in new business and output, adding to capacity pressures. These pressures, in turn, drove firms to hire staff at record levels.
Rising input costs, particularly food and labor expenses, pushed inflation higher, with input and output prices rising at their fastest rates in 15 months and nearly 12 years, respectively. These intensified cost pressures prompted service providers to raise their charges in November.
Capacity pressures among service providers picked up, reflecting the ongoing increases in sales and demand strength. The survey reported that private firms remained optimistic about future business activity, with confidence reaching its highest level since May. This optimism was underpinned by expectations of continued demand strength and effective marketing efforts to drive new business.
Overall, November’s data highlights a services sector marked by strong growth in employment and demand, tempered by inflationary pressures and capacity challenges. The outlook for the sector remains positive, bolstered by robust confidence and a steady rise in new orders.
