India’s service sector regained momentum in November, pushed by strong domestic demand that helped offset the slowdown seen in October. On the other hand, the external demand weakened noticeably, underscoring an emerging split between the strength of India’s internal market and challenges in international trade.
HSBC’s India Services Purchasing Manager’s Index (PMI), compiled by S&P Global, rose to 59.8, which was 58.9 in October. Despite monthly fluctuation, the index remained above the 50-point mark, separating growth from contraction for the 52nd consecutive month, though it exceeded the preliminary estimate of 59.5.
However, the survey highlighted that export-oriented services continued to lose momentum. New export orders grew at their weakest rate since March, with many firms reporting that competition from global players and the availability of lower-priced services abroad were limiting their ability to secure more international work.
Inflationary pressure also eased significantly. Input cost inflation softened to its lowest level since August 2020, even though some firms linked slight increases to food, electricity, and software expenses. This reduction in cost burdens allowed service providers to keep output prices hike minimal.
In fact, the rate of price inflation was the softest in more than 4 years, helping reinforce expectations that the Reserve Bank of India (RBI) may proceed with a 25-basis-point rate cut at its upcoming policy review.
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Despite the rise in output, employment growth remained unchanged. About 95% of the firms surveyed said their payrolls stayed the same, suggesting that rising activity hasn’t yet led to meaningful job growth.
