India's services sector recorded its fastest expansion in four months during October 2026, supported by stronger domestic demand, increased new business orders and improved customer acquisition, according to the latest HSBC India Services Purchasing Managers' Index (PMI).
The seasonally adjusted Services Business Activity Index increased to 55.8 in October from 55.2 in September, indicating a stronger pace of expansion. The latest reading was the highest since June 2026 and remained comfortably above the 50-point mark that separates expansion from contraction.
Editorial Insight
Key Highlights
Important points readers should notice.
Issue/Event: India's services-sector activity reaches a four-month high in October.
Location: India.
Authority/Organisation: HSBC and S&P Global.
Action Taken: October PMI survey recorded an increase in the Services Business Activity Index to 55.8.
- Impact: Stronger domestic demand supported business expansion, while slower exports and hiring indicated continuing challenges.
The survey, compiled by S&P Global for HSBC, indicated that domestic demand remained the main driver of services-sector growth. New business increased at its fastest pace in four months, with companies reporting favourable demand conditions, new customer acquisitions and successful advertising campaigns.
All four broad service categories covered by the survey recorded faster growth in business activity and new orders. Finance and Insurance led the expansion, while Real Estate and Business Services recorded the slowest growth among the surveyed segments.
However, the improvement in domestic business conditions was not matched by international demand. Although new export orders continued to increase, their growth was marginal and represented the weakest expansion in nearly four years. Separate reporting on the survey indicated that export-order growth was at its slowest pace since February 2023.
Editorial Analysis
Why This Matters
The services sector is an important part of India's economy, covering industries such as finance, insurance, information technology, real estate, transport, tourism, professional services and business support. Stronger services activity can indicate improving demand for commercial services, increased customer spending and expanding business opportunities. The October PMI results also suggest that domestic demand is currently providing significant support to service providers. This is important for companies that depend on Indian customers and businesses for revenue. However, slower hiring and weaker export-order growth show that stronger activity does not automatically translate into equally strong job creation or international demand. For businesses, investors and policymakers, the latest survey provides an early indication of changing economic conditions and areas that may require attention in the coming months.
Employment growth also weakened during October. Hiring activity slowed to its weakest pace since June, suggesting that some service providers were able to manage current business requirements without significantly expanding their workforce.
The survey also showed a substantial easing of cost pressures. Input-cost inflation across the services sector declined to its slowest pace since August 2020. Some companies continued to report higher expenses for electricity, labour, raw materials and transportation, but the overall increase in input costs moderated.
Selling-price inflation also eased. Fewer than 3 per cent of surveyed service providers increased their selling prices during October, while the overall rate of charge inflation declined to its lowest level since June.
The broader private sector also recorded stronger activity. The HSBC India Composite PMI Output Index, which combines manufacturing and services activity, rose to 56.2 in October from 55.9 in September, marking its fastest expansion in four months.
Manufacturing output growth moderated during the month but remained stronger than services-sector output growth. Overall new business orders across the private sector increased at their fastest pace since June.
Despite the improvement in current business activity, companies remained cautious about the future. Business confidence weakened in October and stayed below its long-term average, indicating that firms continued to face uncertainty about future growth prospects.
The latest survey therefore presents a mixed picture of India's economy: domestic demand and business activity are strengthening, while weaker export growth, slower hiring and cautious business sentiment remain important areas to watch.
