India services growth at 3-month high, but quarter weakest since 2022, PMI shows

India's services sector experienced its strongest growth in three months in September, according to an HSBC survey, but the quarter marked the weakest expansion since early 2022, the Purchasing Managers' Index (PMI) revealed. The HSBC India Services PMI climbed to 55.2 from August's 54.1, surpassing the preliminary estimate of 55.8, indicating a growth trend. However, the July-September average contracted to its lowest level since March 2022, signaling a softer outlook as hiring slowed and export momentum weakened.

Despite the positive momentum, new business orders surged at their fastest rate since June, but international demand faltered with export order growth decelerating to its weakest pace in nearly three years, suggesting that domestic customers were a more reliable base for September's growth. Input cost inflation hit its lowest level in 10 months, while fees charged to customers rose at the slowest pace since June.

Business confidence rose to a three-month high, yet remained muted historically, with only about 16% of firms anticipating an increase in activity over the next year. The services sector's resurgence, coupled with manufacturing growth accelerating to its fastest pace since February, propelled the India Composite PMI to a three-month high of 55.9 in September, up from August's 54.3. Nevertheless, the quarterly average remained the weakest since January-March 2022, dampening the signs of recovery.