India's services sector growth hits three-month high in September on strong domestic demand: PMI
India's services sector growth accelerated to a three-month high in September, driven by a sharp rise in new orders amid strengthening domestic demand, according to a monthly survey released on Tuesday.
The seasonally adjusted HSBC India Services PMI Business Activity Index rose to 55.2 in September from 54.1 in August, signalling the strongest expansion since June.
Despite the monthly improvement, the sector's average growth during the second fiscal quarter remained below that of the previous quarter and was the weakest since the three months to March 2022, the report said.
In the Purchasing Managers' Index (PMI), a reading above 50 indicates expansion, while a score below 50 represents contraction.
The survey, compiled by S&P Global from responses from around 400 service sector companies, showed that demand for digital solutions, food, insurance, loans, software, transportation, and travel services contributed to the growth.
International demand for Indian services also improved, with companies reporting increased business from Germany, the UAE, the UK and the US.
"The PMI survey suggested that India's services sector continued to improve, supported by strengthening domestic demand. At the same time, export business continued to expand, although the pace of growth slowed," said Pranjul Bhandari, Chief India Economist at HSBC.
Improving order books and projects in the pipeline also encouraged service providers to hire additional workers in September, although the pace of employment growth was slower than in August.
Cost pressures eased during the month, with input price inflation falling to its lowest level since November 2025.
"Input-cost pressures on service providers eased to a 10-month low, reducing the need to raise selling prices. The outlook remained positive, with service providers reporting improved expectations for future activity for the second consecutive month," Bhandari said.
Services companies remained optimistic about the outlook for the next 12 months, citing resilient demand and rising customer enquiries. Just under 16 per cent of respondents expected output to increase over the coming year, while the rest anticipated no change from current levels.
The broader private sector also recorded faster growth in September.
The HSBC India Composite PMI Output Index, which covers manufacturing and services, rose to 55.9 in September from 54.3 in August, indicating the strongest expansion in private sector output since June.
The composite index is a weighted average of manufacturing and services PMI indices, with the weights reflecting the relative size of the two sectors based on official GDP data.
The report said a resumption of job creation in manufacturing, combined with sustained growth in services, resulted in increased employment at the composite level.
