Services activity hits 3-month high in September on demand surge

India's services sector experienced a three-month high in activity during September, according to a report from HSBC. The HSBC India Services Business Activity Index climbed to 55.2, up from 54.1 in the previous month. This figure, still below the 60.9 benchmark from September 2025, signifies expansion, as any reading above 50 indicates. However, the average services PMI for July-September was the lowest since March 2022.

The HSBC economist, Pranjul Bhandari, attributed this growth to enhanced domestic demand and better sales. Service exports continued to expand, though at a slower pace compared to earlier months. Meanwhile, manufacturing activity also rose, with the PMI reaching a seven-month high of 55.1 in September, up from 52.8 in August. This surge in manufacturing activity, combined with the services sector, pushed the composite PMI to 55.9 in September, driven by a significant rise in new orders.

Bhandari noted that service providers had increasingly positive expectations for future activity for the second month in a row. Business confidence improved as well, buoyed by resilient demand and a rise in customer inquiries. About 16% of respondents expected output to increase over the next year, while the rest saw no change. New orders for the services sector surged at the fastest rate in three months.

The strongest growth was seen in finance and insurance, along with consumer services. However, export demand for Indian services improved, driven by demand from Germany, the UAE, the UK, and the US, though the pace of new export business growth was the slowest in nearly three years.