India’s services sector continued to expand in September, marking the 26th consecutive month of growth, though at a slower pace due to weaker international demand. The seasonally adjusted index fell to 60.9 in September from 62.9 in August, remaining well above the neutral 50 mark and signaling robust expansion. Business activity eased in September from the recent-high August levels. While most indicators moderated, the survey shows no major loss of growth momentum.
The Future Activity Index rose to its highest level since March, reflecting strong optimism among services firms about business prospects. New orders rose in September, but more slowly than in August. Export growth slowed, hitting the weakest pace since March, as companies cited competitive pressures and cost-control measures as constraints on expansion. Job creation also slowed, with fewer than 5% of firms reporting hiring growth. Prices charged for services rose at the slowest rate since March, while companies faced higher input costs, particularly for labor and materials.
Overall inflation remained steady and below its long-term average. Despite these challenges, business optimism improved, reaching a six-month high, with firms citing advertising, efficiency gains, competitive pricing, and tax cuts as positive drivers for growth. India’s manufacturing sector also saw slower expansion, with the Manufacturing PMI easing to 57.7 in September from 59.3 in August, the weakest pace of improvement since May, though still indicating solid growth.
The Composite PMI, which combines manufacturing and services, fell to 61.0 in September from 63.2 in August, reflecting the slowest overall growth since June, driven by weaker output and new order growth across both sectors.