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India’s services activity improves in September, but hiring growth slows

English हिंदी ಕನ್ನಡ മലയാളം தமிழ் తెలుగు
First brief 3 Sep, 3:54 pm IST Updated 6 Oct, 1:00 pm IST 3 developments 4 min read Latest ↓
File: Tata Steel plant, Jamshedpur
Kharbaan Ghaltaan · CC BY 4.0

Where it stands

India's services survey improved in September, with its business-activity index rising to 55.2 from 54.1 in August. Both readings are above 50, the survey's dividing line between expansion and contraction. The rise therefore signals a stronger monthly improvement, not a 55.2% increase in output. Stronger demand and new orders helped lift activity. Firms continued adding staff, but hiring grew more slowly than in August. Costs also continued to rise, although input-cost inflation eased to its weakest since November 2025. A slower rise in costs does not mean costs fell. The recovery needs to be read alongside the wider period. September was the strongest month since June, yet July–September was the weakest quarter for services growth since early 2022. One better month therefore does not erase the preceding slowdown. The survey covers reporting companies, not every worker or household in the economy.

Background

Services businesses sell activities such as transport, financial services and other forms of assistance rather than only manufactured goods. To track changes quickly, S&P Global asks around 400 service companies about conditions compared with the previous month. Their answers help show whether improvement or deterioration is becoming more widespread. The main services figure measures business activity. New orders help explain future workload, while employment and costs reveal other pressures. These indicators can move differently: firms may handle more orders without increasing staff at the same pace. A single headline number cannot describe every part of business conditions. The survey converts responses into indices centred on 50 and adjusts for usual seasonal patterns. This provides a timely signal, but it is not a complete national-accounting measure of output. GDP data and the experiences of individual firms can therefore tell a different or more detailed story. Monthly and quarterly comparisons also answer different questions. A stronger September can improve conditions at the end of a weak quarter. Both descriptions can be true because one compares individual months while the other covers three months together.

How it developed

  1. 1 September 2026, 10:30 am IST
    How it started

    Manufacturing PMI fell to a five-year low of 52.8 in August

    S&P Global released the HSBC India Manufacturing PMI for August 2026 on 1 September 2026. The index fell to 52.8, from 53.5 in July, the lowest reading in five years. Output and new orders grew at the slowest pace since August 2021. Manufacturing jobs fell for the first time in two and a half years. Input cost inflation was the lowest in six months. HSBC chief India economist Pranjul Bhandari said production is "still expanding but at a markedly slower pace".

    S&P GlobalANIBusiness Standard
  2. 3 September 2026, 10:30 am IST
    New fact

    Services PMI rose to 54.1. Services hiring hit a 15-month high.

    S&P Global released the HSBC India Services PMI for August 2026 on 3 September 2026. The services index rose to 54.1, from 53.3 in July, below the long-run average of 54.5. Services firms added jobs at the fastest pace in 15 months. Prices charged rose at the fastest pace since March 2026. The composite PMI stayed at 54.3, the same as in July. HSBC chief India economist Pranjul Bhandari said growth was "still among the weakest seen in over four years".

    S&P GlobalIANSBusiness Standard
  3. 3 September 2026
    Settled

    Both August readings are out. Growth continued at a slower pace.

    Both August 2026 PMI readings are now published. S&P Global said private sector growth in August was solid. The pace was the joint-slowest in four and a half years. Total private sector employment grew at the fastest pace in 14 months. On 31 August 2026 the statistics office put April to June 2026 GDP growth at 7.8 per cent. The official Index of Industrial Production (IIP) grew 6.7 per cent in July 2026.

    S&P GlobalMinistry of Statistics and Programme ImplementationNational Statistics Office
  4. 6 October 2026; September survey released
    New fact

    New orders lift activity while the wider quarter remains weak

    The HSBC India Services report, compiled by S&P Global, found stronger activity across the surveyed sectors. Finance and insurance led growth. Overseas orders also increased, but their growth was the weakest in nearly three years. Domestic improvement and export demand therefore did not move at the same pace. The combined manufacturing-and-services output index rose to 55.9 from 54.3. This composite measure uses the two sectors' output indices with economic weights. It is not a simple average of the services reading and the headline manufacturing PMI. Responses were collected from 7 to 28 September. The release describes that survey period; it does not measure every development occurring in October.

    HSBC / S&P GlobalBusiness Standard

Why it matters for UPSC

GS3 · Indian economyPrelims · Economic indicators

Distinguish a survey index from a percentage growth rate and GDP. Explain why output, new orders, employment and costs can move at different speeds. Read a monthly improvement alongside the quarter's performance before drawing conclusions about the economy.

Key terms

Purchasing Managers' Index (PMI)A PMI is a monthly survey of companies. Purchasing managers report whether business rose, fell or stayed the same compared with the month before. The answers become an index from 0 to 100. S&P Global compiles India's PMI. HSBC sponsors the survey. Answers are collected in the second half of each month. India's manufacturing survey started in March 2005.
The 50 markThe survey's boundary between improvement and deterioration compared with the previous month. A reading above 50 indicates expansion; below 50 indicates contraction. A rise from 54.1 to 55.2 signals a stronger improvement in the survey, not output growth of 55.2% or 1.1%.
Manufacturing PMIThe manufacturing PMI is a weighted average of five indices. New orders carry 30 per cent. Output carries 25 per cent. Employment carries 20 per cent. Suppliers' delivery times carry 15 per cent. Stocks of purchases carry 10 per cent. Around 400 manufacturers answer the survey each month. The long-run average of the index is 54.2.
Services PMIThe services PMI is the Services Business Activity Index. The index comes from one question. The question asks whether business activity rose, fell or stayed the same. Around 400 service companies answer. The panel covers transport, information, finance, insurance, real estate and business services. The long-run average is 54.5. S&P Global says the services index is not comparable with the manufacturing PMI.
Composite output indexA combined indicator using manufacturing output and services business activity, weighted for their economic importance. It is not the simple average of the two headline PMIs. September's 55.9 reading indicates expansion across the combined measure, not a direct estimate of GDP growth.
Diffusion indexAn index based on how many respondents report an increase, no change or a decrease. For this survey, the share reporting an increase receives full weight and the unchanged share half weight. It measures the spread of change across firms, not the exact volume produced by each.
Input-cost inflationThe rate at which businesses' costs are rising, including items such as wages and purchased supplies. Slower inflation means costs are increasing less quickly. It does not necessarily mean they are lower than before, or that customers' prices have fallen.
Sources (10)
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