India’s Services PMI Hits 3-Month High of 55.2 in September, but Q2 Growth Slows to Lowest Since 2022

New Delhi: India’s dominant services industry expanded at its fastest pace — a three-month high in September on stronger domestic demand for financial, consumer and digital services, though the broader July-September quarter recorded the sector’s weakest growth since 2022, a private survey showed on Tuesday.

Signalling the strongest upturn since June, the seasonally adjusted HSBC India services PMI business activity index rose to 55.2 in September, from 54.1 in August.

In the Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

Commenting on the survey, Pranjul Bhandari, chief India economist at HSBC said that the PMI survey suggested that India’s services sector continued to improve, supported by strengthening domestic demand.

“At the same time, export business continued to expand, although the pace of growth slowed,” Bhandari said.

As per the survey, the upturn in services sector activity, however, failed to lift the quarterly average above that seen in the previous period.

“In fact, growth over the second fiscal quarter was the weakest since the three months to March 2022,” the survey report said.

The survey further said that the growth in India’s services sector was driven by increased demand for digital solutions, food, insurance, loans, software, transportation, and tours and travel.

“Moreover, international demand for Indian services improved, with panellists reporting gains from Germany, the UAE, the UK and the US,” it said.

On the job front, the survey also pointed out that improving order books and projects in the pipeline prompted service providers to recruit extra staff during September.

“However, the rate of employment was softer than in August.

Meanwhile, cost pressures subsided at the end of the second fiscal quarter, with the rate of input price inflation retreating to its weakest since November 2025,” the survey said.

However Bhandari said that input-cost pressures on service providers eased to a 10-month low, reducing the need to raise selling prices.

“The outlook remained positive, with service providers reporting improved expectations for future activity for the second consecutive month,” he added.

Going ahead, Indian services companies remained optimistic about the year ahead, supported by resilient demand and rising customer enquiries.

“Just under 16 per cent of respondents expect output to increase over the coming 12 months, while the remainder anticipate no change from current levels,” it said.