India’s Service Sector PMI Surges in October: A Strong Rebound Amid Cost Pressures
India’s services sector witnessed a notable rebound in October, driven by robust customer demand, as per the latest survey data. The Service PMI, a critical economic indicator, showed sustained expansion, marking 39 consecutive months above the 50-point mark, which signals growth. Let’s delve into what these findings reveal about the health and momentum of India’s economy.
Finding multibagger stocks is important for building wealth. Discover potential multi-baggers at Sovrenn Discovery.
Strong Demand Fuels Service Sector Expansion
The HSBC India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 58.5 in October, up from 57.7 in September. After a slight dip, the October surge reflects renewed demand across both domestic and international markets. Responses from over 400 service firms highlight a significant uptick in business activity, driven by customer interest and robust sales pipelines.
Employment Boost: Fastest Hiring in Over Two Years
The October PMI data also showcased the strongest job creation in 26 months as companies hired to keep up with surging demand. The hiring boost underscores the optimism within the service sector, where demand remains elevated despite economic uncertainties. “Strong expansions in output and consumer demand led to a substantial increase in employment within the services sector,” said Pranjul Bhandari, Chief India Economist at HSBC.
Investing has built huge wealth for several HNI investors. Learn investing FREE OF CHARGE at Sovrenn Education
Services Sector: The Cornerstone of India’s GDP Growth
India’s services sector plays a pivotal role in the economy, contributing over 50% to the national GDP. The country’s economy recorded an 8.2% growth rate in the 2023-24 fiscal year, outpacing the Reserve Bank of India’s (RBI) 7% forecast. However, GDP growth moderated to 6.7% in the April-June quarter, reflecting global headwinds and domestic cost pressures. Despite this, the robust performance in October suggests the sector is regaining momentum and supporting broader economic stability.
Resurgence in Manufacturing Activity
India’s manufacturing sector also picked up speed in October. The HSBC India Manufacturing PMI increased to 57.5, up from September’s 56.5, highlighting strong new orders and export demand. This rise breaks from September’s eight-month low, signaling renewed vigor across the manufacturing landscape. Together, these trends reflect a broadly positive economic outlook as both service and manufacturing sectors post gains.
Conclusion: Strong Foundation Amid Inflationary Challenges
India’s service sector has shown impressive resilience, reflecting the strength of domestic demand even as input costs rise. With high levels of consumer interest, expanding employment, and a positive outlook for both services and manufacturing, India’s economy appears well-positioned to weather the global headwinds. Businesses’ ability to navigate cost pressures and maintain growth suggests a stable trajectory in the months ahead, lending confidence to India’s economic forecast as the fiscal year progresses.
Also Read: India’s Fiscal Discipline and Core Sector Resurgence: H1 FY25 Highlights