MUMBAI: Following the declining in manufacturing, the growth rate in the dominant services sector has declined to a 10-month low in September. This is due to the pull down by the decrease in demand as new business, international sales, and output all rose at the slowest rates since late 2023.
According to the purchasing managers’ index (PMI) figure, released by HSBC and compiled by S&P Global, declined to 57.7 in September from 60.9 in August. The index, however, remains above the neutral 50 mark for the 38th straight month.
“Among the main positive outcomes seen in September were solid job creation, strengthening business confidence, and the weakest uptick in selling prices in over two-and-a-half years,” the survey added.
New business intakes expanded sharply at the end of the second financial quarter, but the pace of growth retreated to a 10-month low service industry.
The survey attributed the increase in output to new business gains, positive demand trends, and investment in technology, while growth was curbed by competition, cost pressures, and changes in consumer preference, a switch to online services.
New business intakes also expanded sharply at the end of the second financial quarter, but the pace of growth retreated to a 10-month low. Where an increase was noted, survey participants remarked on healthy demand conditions. Those that experienced challenges commented on fresh entrants and greater competition.
Pranjul Bhandari, chief economist at HSBC India, said the services PMI data showed slower pace of expansion in September, and the new business index followed a similar trajectory as the headline figure, indicating the possibility of softer output growth in the coming months.
“Services companies’ margins have likely been squeezed further, as prices charged rose at a slower pace when input cost inflation intensified. A long period of robust new business growth has led to strong labour demand,” she added.
On the export front, there was a softer increase in new export orders, and the rate of expansion moderated to the weakest in 2024 so far.
“Still, some firms noted gains from Asia, Europe, North America, the Middle East, and the US,” the survey noted.
On employment, the survey said the solid increase in services employment seen since May was extended to September, as service providers reported the recruitment of full and part-time workers, with both permanent and temporary contracts being offered.