The services sector recovered from its ten-month low in September with the purchasing managers' index reaching 58.5 in October supported by strong expansions in output and new business, boosting job creation.
The seasonally adjusted HSBC India services business activity index rose from 57.7 in September to 58.5 in October, as robust sales pipelines and strong demand conditions supported the upturn in business activity, the British lender said Wednesday.
In the PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
Last week, the bank had said the manufacturing PMI also clawed back from the eight-month low in September to climb to 57.5 percent in the October reading.
"In October, the services sector experienced strong expansions in output and consumer demand, as well as job creation, which achieved a 26-month high," Pranjul Bhandari, the chief economist at HSBC India, said.
The latest data also highlight a recovery in growth of new export sales across the services economy, which survey respondents attributed to strengthening demand from clients in Africa, Asia, the Americas, the Middle East and England, she said.
In response to positive sales developments and optimism regarding near-term prospects, firms recruited extra workers to the greatest degree in just over two years. Moreover, capacity pressures also boosted job creation. Around 13 percent of panelists reported job creation, compared to 9 percent in September.
Input price inflation accelerated to a three-month high in October, with services companies mainly reporting higher food and wage costs. Companies shared part of their additional cost burdens with clients by continuing to lift selling prices.
Exactly one-quarter of the survey panel forecast higher output volumes over the coming year, linked to healthy demand trends, marketing efforts and new client enquiries. At the same time, 74 percent of firms foresee no change in business activity from present levels.
Meanwhile, the HSBC composite output index also rose from September's 10-month low of 58.3 to 59.1 as new business inflows also expanded at quicker rates in both the manufacturing and service sectors, boosting growth of sales and employment at the composite level.
Goods producers recorded stronger rates of increase in new business and output than service providers in October, but the latter led when it came to job creation.
On the price front, rates of input cost inflation were equal in the manufacturing industry and the service economy. 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.