The PMI Services Index — one of the key gauges to measure activity in the services sector — moderated in September to 55.2, falling from August’s 18-month high of 56.7. A reading above 50 means expansion, while a score below 50 denotes contraction in economic activity.

The seasonally adjusted India Services Business Activity Index, however, remained well above its long-run average. “Despite easing from August, the rate of expansion was marked and the second-fastest since February 2020,” the survey said.

Buoyed by signs of improvements in underlying demand, Indian service providers took on additional staff during September. The increase in employment ended a nine-month sequence of job shedding, but was marginal overall as some panelists said they had sufficient staff to deal with their workloads.

“Indian firms continued to benefit from a recovery in demand as the pandemic receded and restrictions were lifted. The improved market environment meant firms secured new work during September,” said Pollyanna De Lima, economics associate director at IHS Markit.

“While forecasts of better demand supported business confidence regarding output, growth looks set to be constrained by rising inflation expectations. We saw a substantial decline in positive sentiment among service providers due to this factor,” Lima said.