BENGALURU - Growth in India's dominant services sector was the slowest in over two years in January amid cooling demand but remained historically strong and led to a substantial rate of hiring, a business survey showed on Wednesday.

Asia's third-largest economy has been struggling with slackening consumption. To try and boost spending the government gave some tax relief to the middle class at its annual budget on Feb. 1 but shied away from announcing big reforms which are much needed to prop up growth.

The HSBC final India Services Purchasing Managers' Index, compiled by S&P Global, fell to 56.5 in January from 59.3 in December, a tad lower than a preliminary estimate of 56.8 but comfortably ahead of the 50-mark separating contraction from growth.

"The business activity and new business PMI indices eased to their lowest levels since November 2022 and November 2023 respectively," said Pranjul Bhandari, chief India economist at HSBC.

"That said, new export business partly countered the downtrend and continued to rebound from a dip in late-2024, in line with official data."

Demand for services rose at the slowest pace in 14 months but remained sturdy. It was supported by international demand that was the strongest in five months.

The future activity sub-index moderated to a three-month low but the fall was insignificant and firms hired new staff at one of the fastest paces since the inception of the survey in December 2005.

Inflationary pressures picked up, as both input costs and prices charged rose at a strong pace.