India services PMI rises to 55.2 in September, hits 3-month high

India's services sector experienced its fastest growth in three months in September, driven by higher demand for financial, consumer, and digital services according to a recent survey. However, the sector's quarterly expansion was the weakest in over four years. The HSBC India Services Purchasing Managers' Index (PMI) climbed to 55.2 from 54.1 in August, but still fell short of the preliminary estimate of 55.8.

A figure above 50.0 indicates growth. While September's improvement did not prevent the July-September average from hitting its lowest level since March 2022, it painted a less optimistic picture as hiring slowed and export momentum weakened. New business, a crucial indicator of demand, surged at its fastest pace since June. However, international demand was less robust, with export order growth slowing to its weakest pace in nearly three years, indicating that domestic customers provided a stronger base for the sector's September surge.

Employment growth slowed from August, while input cost inflation hit its lowest point in 10 months, and fees charged to customers increased at the slowest pace since June. Business confidence reached a three-month high, but remained historically subdued, with only about 16% of firms anticipating growth over the next year. The services sector's upturn, combined with manufacturing growth accelerating to its fastest pace since February, pushed the India Composite PMI to a three-month high of 55.9 in September from August's 54.3.

Nonetheless, its quarterly average was the weakest since January-March 2022, casting doubt on the signs of recovery.