India’s Services Sector Growth Touches 3-Month High in September on Strong Domestic Demand: PMI

New Delhi: India’s services sector growth touched a three-month high in September, as new orders increased sharply, supported by strengthening domestic demand, a monthly report said 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 upturn since June.

The upturn in services sector activity, however, failed to lift the quarterly average above that seen in the previous period. “In fact, growth over the second fiscal quarter was the weakest since the three months to March 2022,” the report said.

In the Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

S&P Global compiles the HSBC India Services PMI from responses to questionnaires sent to a panel of around 400 service sector companies.

According to the survey, growth in India’s services sector was driven by increased demand for digital solutions, food, insurance, loans, software, transportation, and tours and travel.

Moreover, international demand for Indian services improved, with panellists reporting gains from Germany, the UAE, the UK and the US.

“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.

On the job front, improving order books and projects in the pipeline prompted service providers to recruit extra staff during September. However, the rate of employment was softer than in August.

Meanwhile, cost pressures subsided at the end of the second fiscal quarter, with the rate of input price inflation retreating to its weakest since November 2025.

“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 added.

Going ahead, Indian services companies remained optimistic about the year ahead, supported by resilient demand and rising customer enquiries. Just under 16 per cent of respondents expect output to increase over the coming 12 months, while the remainder anticipate no change from current levels.

Meanwhile, the HSBC India Composite PMI Output Index rose to 55.9 in September, up from 54.3 in August, indicating the strongest upturn in private sector output since June.

Composite PMI indices are weighted averages of comparable manufacturing and services PMI indices. Weights reflect the relative size of the manufacturing and service sectors according to official GDP data.

As per the report, the reinstatement of job creation in the manufacturing industry and sustained growth at service providers resulted in greater employment at the composite level.

(Disclaimer: Except for the headline, this article has not been edited by HDFC Sky editorial team and is auto-generated from PTI feed.)