India services sector activity softened in the month of October but was well above the neutral mark of 50.0, amid softer, although still substantial, expansions in Indian services output and new business. While factors like demand buoyancy and GST (Goods and Services Tax) relief led to an improvement in operating conditions, competition and heavy rains constrained growth.
According to the survey report, the seasonally adjusted HSBC India Services PMI Business Activity Index slowed down to 58.9 in October from 60.9 in September. Further, the HSBC India Composite PMI Output Index -- which measures both manufacturing and services -- also eased to 60.4 in October as against 61.0 in September. Still, companies were strongly confident of a rise in business activity over the course of the coming 12 months.
The report said that international demand for Indian services improved further, as signalled by another increase in external sales. The rate of expansion was solid, though the weakest since March. Further, to support rising intakes of new business, meet delivery deadlines and maintain reliable services, companies recruited additional staff in October. The rate of job creation was slight, however, and the joint-softest in a year-and-a-half (equal to July).
On the inflation front, offering respite to firms, input costs rose at the slowest rate in 14 months. With cost pressures receding, prices charged for the provision of Indian services increased at the slowest rate in seven months. Besides, sustained job creation supported the first decline in outstanding business volumes in nearly four years. However, the rate of depletion was only marginal.
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