India services PMI hits 3-month high in September as demand strengthens
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India’s services sector growth accelerated to a three-month high in September, driven by a sharp rise in new orders and strengthening domestic demand, according to the HSBC India Services PMI survey released on Tuesday.
The seasonally adjusted HSBC India Services PMI Business Activity Index rose to 55.2 in September from 54.1 in August, signalling the strongest expansion in services activity since June. A reading above 50 indicates expansion, while a reading below 50 signals contraction.
Domestic demand drives services growth
The improvement was supported by stronger demand for a range of services, including digital solutions, food, insurance, loans, software, transportation, and travel, and tourism, the survey showed.
International demand for Indian services also strengthened, with companies reporting higher business from Germany, the UAE, the UK, and the US. However, the pace of export growth moderated during the month. “The PMI survey suggested that India's services sector continued to improve, supported by strengthening domestic demand. At the same time, export business continued to expand, although the pace of growth slowed,” said Pranjul Bhandari, Chief India Economist at HSBC.
Despite the monthly acceleration, services sector growth during the September quarter remained weaker than in the previous quarter. The report said the quarterly expansion was the weakest since the three months to March 2022.
The HSBC India Services PMI is compiled by S&P Global based on responses from around 400 companies across India’s services sector.
Hiring resumes, cost pressures ease
Improving order books and a stronger pipeline of projects prompted service providers to increase hiring in September. However, the pace of job creation was slower than in August.
Meanwhile, input-cost pressures eased sharply towards the end of the quarter. The rate of input price inflation fell to its lowest level since November 2025, reducing pressure on companies to raise selling prices.
“Input-cost pressures on service providers eased to a 10-month low, reducing the need to raise selling prices. The outlook remained positive, with service providers reporting improved expectations for future activity for the second consecutive month,” Bhandari said.
Services companies remained optimistic about the year ahead, supported by resilient demand and an increase in customer enquiries. Just under 16% of respondents expect business activity to rise over the next 12 months, while most anticipate activity to remain broadly unchanged.
Meanwhile, private sector output also picked up in September. The HSBC India Composite PMI Output Index rose to 55.9 from 54.3 in August, marking the strongest expansion in private sector output since June.
The composite index combines manufacturing and services PMI readings, with the weights reflecting the relative size of the two sectors in India’s GDP. The report said a resumption in manufacturing job creation, alongside sustained hiring by service providers, resulted in an increase in overall private-sector employment.