Growth in India’s dominant services sector remained strong in November despite the steepest rise in prices for over a decade, while consistent demand led to a significant rise in business sentiment and record hiring, a business survey showed.
The headline Purchasing Managers’ Index (PMI) figure, compiled by S&P Global and released by HSBC, was recorded at 58.4 in November.
The index remained almost unchanged from 58.5 in October but lower than a preliminary estimate of 59.2.
Notably, the index has been above the neutral 50-mark that separates contraction from expansion for the 40th month straight.
“Survey participants remarked on demand strength and new business gains,” said the survey.
It noted that respondents continued to report improving international demand for their services, with new export orders increasing at a rate that was the quickest in three months but below those seen around mid-year.
The report highlighted sustained sales growth that continued to exert pressure on firms’ operational capacities, leading to record-breaking job creation.
Employment growth reached its highest level since the survey’s inception in 2005, driven by the recruitment of both permanent and temporary staff.
However, this hiring surge came with a cost, as price pressures intensified. Input costs rose at their fastest pace in 15 months, while output prices recorded their steepest increase in nearly 12 years.
Pranjul Bhandari, chief India economist at HSBC, said employment in the services sector grew at the fastest pace ever since the survey began in 2005.
“The hiring surge reflected the sector’s improving business confidence, growing new orders, and vigorous international demand. At the same time, high food and labour costs drove up input and output prices to their fastest rates in 15 months and nearly 12 years respectively,” she said.
New export orders also picked up at the quickest rate in three months, though this was still slower compared to mid-2024 levels. Firms attributed growth to demand from clients in regions such as Asia, Europe, Latin America, and the US.
The survey said this intensification of cost pressures reportedly prompted service providers to lift their own charges in November. On some occasions, companies suggested that hikes were supported by rosy demand. Output prices increased at the fastest rate in close to 12 years.