India's Services Sector Growth Eases to Five-Month Low

India's services sector saw slowed growth in October with the HSBC India Services PMI falling to 58.9. Despite demand and GST reforms supporting activity, competition and weather challenges dampened momentum. While optimism persists, the overall confidence and job creation slowed, reflecting a softer expansion than previous months.

India's services sector continued its expansion in October, albeit at the slowest pace in five months, as per the HSBC India Services Purchasing Managers' Index. The PMI decreased to 58.9 in October from 60.9 the previous month, although it still stayed above the neutral 50-mark separating growth from contraction.

The S&P Global report credits demand buoyancy and GST reforms with boosting business, even as competition and adverse weather conditions, including heavy rains, posed challenges. 'While India's services PMI softened to 58.9 in October, remaining above its long-run average provided firms with some relief as input costs rose at their slowest in 14 months,' noted Pranjul Bhandari, Chief India Economist at HSBC.

The analysis demonstrated a sharp rise in new business orders but at the most reduced rate since May, due to competition and weather disruptions like floods. Yet, strong domestic demand and effective marketing pushed the growth. International orders grew, albeit at the slowest rate since March, while input cost inflation eased, thanks to GST reforms reducing costs, and selling prices increased at their slowest in seven months.

The survey pointed out modest yet positive employment trends, as companies recruited extra staff to handle new business and manage deliveries. This hiring helped marginally reduce work backlogs for the first time in nearly four years. While optimism in the services economy remained strong, reflecting expectations of robust demand and competitive pricing, overall confidence dipped to a three-month low.

The composite PMI, which assesses both manufacturing and services, declined to 60.4 in October from 61.0 in September, due to the services slowdown despite faster manufacturing expansion. Data for the survey, encompassing transport, finance, communication, and business services, were gathered from around 400 firms between October 8 and 29, 2025.

(With inputs from agencies.)