India's Services Sector Growth Slows Amid Rain and Competition

India's services sector recorded its slowest growth in five months during October 2025, as competitive pressures and heavy rainfall in various regions impacted business activity. The monthly HSBC India Services Purchasing Managers' Index (PMI), compiled by S&P Global, reported a seasonally adjusted reading of 58.9, a decline from September's figure of 60.9. This drop indicates the weakest expansion since May, although the reading remains significantly above the neutral 50 threshold, which separates growth from contraction. The long-term average stands at 54.3, according to the Press Trust of India.

Pranjul Bhandari, chief economist for India at HSBC, stated, "India's services PMI softened to 58.9 in October, which represented the slowest pace of expansion since May. Competitive pressures and heavy rains were cited as contributors to the sequential slowdown."

The survey, which gathered responses from approximately 400 service sector firms, highlighted that while demand remained buoyant and the Goods and Services Tax (GST) reform provided some relief, challenges such as increased competition and adverse weather conditions hindered growth momentum.

External demand for Indian services continued to rise, yet the rate of increase was noted to be the weakest since March. The report highlighted that the GST reform positively influenced price pressures, with input costs and output charges increasing at their slowest rates in 14 and seven months, respectively.

Despite the deceleration in growth, companies expressed optimism regarding future business activity. Many firms reported strong confidence in their growth prospects for the coming year, leading them to increase their workforce in October to manage new orders and ensure timely service delivery.

Additionally, the HSBC India Composite PMI Output Index, which combines data from both manufacturing and services sectors, also reflected a slowdown. The index fell from 61 in September to 60.4 in October, marking the weakest expansion since May. Bhandari commented, "India's composite PMI fell on a sequential basis from 61 in September to 60.4 last month, largely due to the slowdown in the services sector."

The Composite PMI indices are weighted averages of both manufacturing and services PMIs, adjusted to reflect their contributions to India's gross domestic product (GDP).