India's Services Sector Growth Slows, But Job Creation Rises Amid Inflation

India's services sector growth decelerated to its lowest in over two years in January 2025, according to the HSBC Services PMI. Despite weakened new business growth, job creation surged. Export growth and positive business sentiment continue, although inflationary pressures and competition present challenges moving forward.

India's services sector growth decelerated to its slowest pace in over two years as new business growth weakened and demand momentum softened, revealed the HSBC India Services PMI data on Wednesday. Nonetheless, job creation surged significantly, and business sentiment remained upbeat despite increased cost pressures.

Despite this slowdown, the HSBC Services PMI data indicates that India's services sector remains resilient. Strong job creation, robust export growth, and steady business confidence are evident, though challenges such as inflationary pressures and rising competition loom on the horizon. According to Pranjul Bhandari, Chief India Economist at HSBC, while growth momentum has slowed, the PMI remains above the critical 50-mark.

Bhandari noted that new export business partially countered the slowdown, with official data showing a significant rebound in services exports. Domestic demand is holding steady, and global services trade is bouncing back, indicating a healthy, albeit moderated, expansion ahead.