New Delhi, December 4
India's service sector continued its impressive performance in November 2024, with services sector employment notably grew at the fastest pace ever recorded since this survey began in 2005.
Pranjul Bhandari, Chief India Economist at HSBC, said "During November, services sector employment notably grew at the fastest pace ever recorded since this 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."
The HSBC India Services Business Activity Index recorded a robust 58.4, slightly down from 58.5 in October. According to HSBC PMI, this seasonally adjusted index, compiled by S&P Global, highlights a sharp rate of expansion well above its historical average. Strong domestic and international demand fuelled this growth, alongside gains in new business.
Despite a marginal easing in the growth of total sales compared to October, the sales index remained significantly above its long-term trend.
Firms reported sustained demand strength, leading to heightened output and a surge in job creation. Employment in the services sector grew at the fastest pace since the survey's inception in December 2005, reflecting a combination of permanent and temporary hires.
The remarkable expansion in employment came at a cost, as input price pressures intensified. November saw input costs rise at their steepest rate in 15 months, driven by higher food and labour expenses.
Firms passed on these cost increases to customers, with output prices climbing at the fastest rate in nearly 12 years. Service providers reported that strong demand conditions supported these price hikes.
Pending workloads also grew at the quickest pace in six months, as companies struggled to meet rising demand. Businesses remained optimistic about the future, with confidence reaching its highest level since May 2024.
Expectations of continued demand strength and effective marketing strategies were cited as drivers of this positive outlook.Service providers experienced a solid increase in new export orders, marking the fastest growth in three months.
Gains were reported from clients in Asia, Europe, Latin America, and the US, although the pace of international demand growth was slower than mid-year levels.
The HSBC India Composite Output Index, which measures activity across both manufacturing and services, posted 58.6 in November, slightly down from October's 59.1 but indicative of robust private sector growth.
The services sector outperformed manufacturing in terms of employment growth and cost pressures. Service providers reported sharper increases in input and output prices compared to manufacturers, driven by labour costs and inflationary pressures.