India’s Service Sector Growth Slows in January
India’s service sector saw slower growth in January 2025, according to the latest HSBC PMI [[Business Activity Index]]. While still expanding at a good pace (56.5), this is lower than December’s 59.3 and the slowest since November 2022. The overall economic output, including both services and manufacturing, also slowed down to a 14-month low of 57.7, down from 59.2 in December.
New Business and International Sales
Many service companies reported growth thanks to good demand, new clients, and investments in technology. However, some companies also mentioned a drop in customer numbers. New business continued to grow strongly, although the pace slowed down to a 14-month low. This growth was driven by strong demand and competitive pricing. International sales saw a faster increase, with gains from clients in Asia, Europe, the Middle East, and the Americas. This overall expansion rate reached a five-month high.
Job Creation and Future Outlook
With new business coming in and increasing capacity pressures, service providers started hiring more staff at the beginning of the last fiscal quarter. The rate of job creation was among the fastest since data collection began in December 2005. Indian service providers are optimistic about business activity in the next 12 months. This positive outlook is based on advertising, competitive pricing, and new client inquiries. While the level of positive sentiment dipped slightly to a three-month low, it’s still generally in line with the usual trend.
Inflation and Pricing
The rate of inflation remained mostly unchanged from the start of the year, staying above the long-term average. Because of rising costs and strong demand, prices for services in India went up again at the beginning of 2025. This price increase was significant and higher than the usual trend. This [[market]] analysis suggests that while India’s service sector continues to grow, the pace has slowed recently. Factors like increasing costs and competition might be playing a role. It’s important to monitor these latest updates for a clearer picture of India’s economic situation.