India's Services Growth Accelerates in November as Cost Pressures Ease

India's services sector expanded at a faster pace in November, with the seasonally adjusted HSBC India Services PMI Business Activity Index rising to 59.8 from 58.9 in October, according to data released by S&P Global on Wednesday.

The reading signaled a historically strong rate of expansion and remained comfortably above the neutral 50.0 mark. Firms linked the improvement to a quicker rise in new business intakes.

New orders increased sharply and at a faster rate than in October, supported by firm demand conditions. International demand also improved, though new export orders rose at their slowest pace in eight months amid competition from cheaper overseas services and reports of constrained external sales.

Input cost inflation eased to its lowest level since August 2020, with firms citing moderate increases in electricity, food, rent and software expenses. The softer cost environment led to only a negligible uptick in selling prices, the weakest rise in more than four years.

Employment increased again, but hiring remained modest as pressure on operating capacities stayed limited. Outstanding business volumes were broadly unchanged from October, while companies noted softer year-ahead optimism due to concerns around competition and potential election-related disruptions.

Services PMI momentum improved in November on the back of firm new business gains, Chief India Economist at HSBC, Pranjul Bhandari, noted.

"However, international sales expanded at an eight-month low due to fierce overseas services competition. Input price inflation reached its lowest rate in nearly five-and-a-half years, resulting in negligible increases in selling charges," Bhandari said.

The HSBC India Composite PMI Output Index fell to 59.7 in November from 60.4 in October, indicating the slowest rate of private-sector expansion since May. Growth eased across manufacturing even as momentum strengthened in services. Softer cost pressures contributed to the weakest rise in composite expenses in 64 months, while output charge inflation slipped to an eight-month low.