New Delhi
India’s services sector is slowing down, with growth at its lowest level in over two years. The HSBC India Services PMI dropped from 59.3 in December to 56.5 in January, showing a drop in business activity and new orders.
For those unfamiliar, a PMI above 50 means growth, while below 50 signals trouble. So yes, the services sector is still expanding—but at a slower pace.
What’s Going Wrong?
-Weaker demand – Businesses aren’t getting as many new orders as before.
– Rising costs – Service providers are struggling with higher staff salaries and food prices.
– Pressure on businesses – Companies are still hiring, but faster job creation isn’t enough to keep up with slowing growth.
Pranjul Bhandari, Chief India Economist at HSBC, says:
“India’s services sector is still growing, but the speed has slowed down. Business activity and new orders are at their weakest since late 2022 and 2023.”
A Silver Lining – Global Sales on the Rise
While local demand is cooling off, there’s some good news from international markets. Orders from Asia, Europe, the Middle East, and the Americas have picked up pace. Export demand has recovered from a late-2024 decline, and official trade data confirms India’s services exports are doing well.
Businesses Still Hopeful – But Can They Keep Up?
Despite the slowdown, businesses are hopeful about the next 12 months. Many are focusing on:
– More advertising to attract customers
– Competitive pricing to stay in the game
– New client inquiries to boost sales
However, the reality remains—rising expenses are a growing burden. Companies are charging more for services, as staff costs and food prices continue to rise.
Manufacturing Holds Up, But Services Pull Down the Economy
India’s overall economy also lost some growth momentum in January. While factory output increased, it wasn’t enough to balance out the services sector slowdown. The HSBC India Composite Output Index, which tracks both manufacturing and services, dropped to a 14-month low of 57.7.
The Bigger Question: Is This Just a Temporary Slowdown?
-Will demand bounce back, or are we looking at a longer decline?
– Can businesses absorb rising costs without passing them on to consumers?
– Will the government step in with policy support, or will companies have to manage on their own?
For now, India’s services sector is still growing—but the cracks are showing. Whether this is just a short-term issue or a sign of deeper trouble will be clear in the coming months. Either way, the common citizen will feel the impact first.
