India’s Service Sector Hits Multi-Year Growth Low

New business inflows reached their slowest pace since February 2022, forcing companies to contend with a shrinking pipeline. While the broader sector struggled, Finance and Insurance stood out as the only sub-sector to accelerate its output and sales. Export markets provided a necessary cushion, with service providers reporting steady gains from clients in the United Arab Emirates, the United Kingdom, and the United States.

Despite the slowdown, the labor market showed signs of resilience as job creation rebounded from June’s six-month low. Roughly six percent of firms expanded their payrolls, though the vast majority maintained current staffing levels. Profit margins benefited from a combination of cooling input cost inflation—the lowest since January—and a strategic decision by firms to raise selling prices at the fastest rate since April. The overall private sector landscape reflects this contraction, as the HSBC India Composite PMI fell to 54.3, leaving manufacturing output to carry the weight of the national economy.