India's dominant services sector stayed strong in November but expanded at its slowest pace in a year as demand softened despite cooling inflationary pressures, a private survey showed.

The S&P Global India Services Purchasing Managers' Index fell to 56.9 in November from October's 58.4, below all expectations in a Reuters poll which predicted a more modest dip to 58.0.

That marked the slowest pace of expansion since November last year, but the index remained firm and has been above the 50-mark that separates growth from contraction since August 2021.

The services sector accounts for over 50% of India's gross domestic product (GDP).

The Indian economy grew 7.6% in the July-September quarter, supported by government spending and manufacturing. India remained the fastest growing major economy and outstripped the Reuters poll expectation for a 6.8% expansion.

However, the PMI's new business sub-index - a key gauge of demand - fell for a second month and was its lowest in a year in November. An index measuring international demand fell to a five-month low.

"India's service sector has lost further growth momentum ... but we continue to see robust demand for services fuelling new business intakes and output," noted Pollyanna De Lima, economics associate director at S&P Global.

"The current rates of expansion look very healthy when considering their respective long-run averages and the outlook for business activity remains bright in spite of optimism fading due to rising inflation expectations."

Overall business confidence slipped to a four-month low in November despite upbeat projections for output. The future activity sub-index was well below September's nine-year high.

That led firms to increase headcount at a muted pace, with hiring slowing to a seven-month low.

Operating costs and prices charged to customers increased but the pace for both was the weakest since March.

Retail inflation in India eased to 4.87% - a four-month low in October. It is now close to the mid-point of the Reserve Bank of India's (RBI) target of 2-6% but economists do not expect the RBI to cut interest rates before the third quarter next year.

A manufacturing PMI rose to 56.0 in November but slowing services activity dragged down the overall S&P Global India Composite PMI Output Index to 57.4 - the lowest since November last year. (Reporting by Shaloo Shrivastava; Editing by Kim Coghill)