Services activity slows slightly in Nov, job creation fastest since '05

India's service activity marginally fell in November, due to slower growth in new orders and output, according to a private survey released on Wednesday.

The HSBC India Services Business Activity Index slid to 58.4 from 58.5 in October. It was 56.9 in November 2023.

Employment growth was the fastest since 2005, helped by an increase in sales. Anecdotal evidence indicates a combination of both permanent and temporary hires boosting employment growth, according to the survey conducted by S&P Global. "The hiring surge reflected the sector's improving business confidence, growing new orders and vigorous international demand," said Pranjul Bhandari, chief India economist at HSBC.


Official data released last week showed that the services sector grew 7.1% in the second quarter of the current financial year, compared with 7.2% in the first quarter.

Export orders rose the fastest in three months, though still below the levels seen around mid-year, according to the survey. "Where growth was reported, firms noted gains from clients in Asia, Europe, Latin America and the US," it added.

Cost pressures also intensified.

Input prices rose at their fastest rate in 15 months, above the long-run average, while output prices saw their steepest increase in around 12 years. Bhandari pointed to high food and labour costs as the main drivers behind the increase.

Manufacturing PMI fell to an 11-month low of 56.5 in November, according to the figures released earlier this week.

The composite PMI, the weighted average of comparable manufacturing and services PMI indices, dropped to 58.6 in November from 59.1 in October.

Services firms remain optimistic about the business outlook for the coming year, with confidence reaching its highest level since May.

This optimism is fuelled by expectations of continued strong demand and the belief that marketing efforts will drive new business.