India’s Services Activity Hits Three-Month High in September as Demand Picks Up

India’s services sector gathered pace in September, ending the second quarter of the financial year on a stronger note as businesses saw better demand and a pickup in new orders. 

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The HSBC India Services Purchasing Managers’ Index (PMI) rose to 55.2 in September from 54.1 in August, marking its highest level in three months. 

The index has now remained above the 50 mark which separates expansion from contraction for 62 consecutive months. 

The improvement was supported by demand across a range of services, from digital solutions and software to insurance, loans, transportation, food, tours and travel. 

New Business Picks Up 

Firms noticed a clear rise in new orders in September. 

There were the fastest increases in new orders in three months, where finance and insurance, and consumer services showed the sharpest rises in the surveyed sectors. 

Other major sectors include real estate and business services, as well as transport, information and communication. 

According to Pranjul Bhandari, chief India economist at HSBC, the rise in the service sector was driven by rising domestic demand. 

Moreover, overseas business increased as well, though at a more discouraging rate. 

New export orders increased in September, though at the slowest pace in almost three years. 

Companies Continue Hiring, but at a Slower Pace 

Better order books and projects in the pipeline encouraged services companies to add employees during the month. 

Hiring, however, did not keep pace with August. 

Employment increased at a moderate rate, with softer recruitment among real estate and business services companies contributing to the slowdown. 

That creates a somewhat mixed picture: businesses are receiving more orders and expanding activity, but the improvement has not translated into an equally strong acceleration in hiring. 

Costs Become More Manageable; Lowest in 10 Months 

One of the positive signs was the state of business costs. 

Inflation on input costs fell to its lowest point since November 2025, with the drop evident in all four services segments surveyed. 

Companies facing increasing costs cited food, fuel, insurance costs, maintenance, software and technology costs. 

Some companies were forced to raise customer prices, but overall the rise in selling prices was relatively small and the lowest since June. 

According to Bhandari, lower cost pressures decreased the need to raise selling prices. 

Business Confidence Improves for Second Month 

Companies also became more optimistic about the months ahead. 

Expectations for future business activity improved for a second consecutive month, adding to signs that sentiment within the services industry is gradually strengthening. 

The recovery was not limited to services. 

India’s manufacturing PMI also improved in September, rising to a seven-month high of 55.1. 

Together, the two sectors pushed the HSBC India Composite PMI Output Index to 55.9 from 54.3 in August. 

Sales across manufacturing and services also grew faster during September, although the pace remained the weakest since the end of FY22. 

September’s numbers therefore point to a broader pickup in private-sector activity after a relatively softer August. Services businesses are seeing better domestic demand and stronger order books, while easing cost pressures offer some relief. Export growth and the slower pace of hiring, however, remain areas to watch as the sector moves into the second half of the financial year.