The HSBC India Services PMI was revised down to 58.4 for November 2024, from the preliminary reading of 59.2, reflecting a slight cooling from previous months but still signaling robust growth in the services sector. This marks the 40th consecutive month of expansion in services activity, driven largely by strong demand and new business gains.

While the final PMI reading for October stood at 58.5, the November figure was lower than market expectations, which had anticipated a value of 59.5. Despite this revision, the PMI continues to point to healthy growth in the sector, with firms seeing demand remain strong, albeit at a somewhat slower pace than earlier in the year.

Demand and New Business Growth

The data highlighted that total sales growth moderated in November but remained above its long-term average, indicating solid performance for the services sector overall. The softening of sales growth was still in line with robust growth trends, and new export orders recorded their strongest rise in three months. This indicates that global demand for Indian services remains resilient, contributing to the expansion.

Firms across the sector raised employment levels to the highest seen since the survey began in December 2005. The increase in job creation was driven by the continued demand strength, as businesses sought to scale their operations to meet market requirements.

Cost Pressures and Inflation

On the price front, input cost inflation accelerated to a 15-month high in November, driven primarily by higher food and wage costs. This placed pressure on businesses, prompting them to pass on these increased costs to clients. As a result, output cost inflation surged to its fastest rate in nearly 12 years, further elevating the burden on customers.

The inflationary pressures come at a time when businesses are facing a challenging environment with rising input costs, which have been impacting their ability to maintain profit margins while still meeting growing demand.

Business Sentiment

Despite the inflationary pressures, business sentiment saw a positive shift, improving to a six-month high in November. This increase in optimism was fueled by expectations of continued strong demand and the belief that ongoing marketing efforts will help drive new business opportunities in the months ahead. The positive outlook reflects confidence that the services sector will remain a key driver of India's economic recovery and expansion.

Conclusion

The HSBC India Services PMI for November 2024 reflects a slightly weaker pace of growth than anticipated but still indicates ongoing expansion in the services sector. Strong demand, particularly from export markets, has helped sustain growth in new business, while firms are adjusting to cost pressures by raising employment levels. However, the inflationary environment remains a concern, with rising input and output costs impacting businesses. Despite these challenges, business sentiment remains optimistic, suggesting that demand strength and marketing efforts will continue to fuel growth in the months ahead.

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