The HSBC India Services Purchasing Managers’ Index rose to 59.0 in December from November’s one-year low of 56.9. With this, India’s services activity index has expanded for 29 straight months and is well above the 50-mark reading which separates growth from contraction.
“India’s services sector ended the year on a high note, with an uptick in business activity, led by a three-month-high new orders index,” said Pranjul Bhandari, chief India economist, HSBC.
“Input costs rose at a slower pace than in November, continuing the softening trend which began in mid-2023. But output prices rose at a faster pace, indicating improved corporate margins in December,” she added.
The survey cited anecdotal evidence to show that favourable economic conditions and positive demand trends were the key determinants of output growth.
From a one-year low in November, the new business sub-index increased due to favourable economic circumstances and positive demand. On the other hand, demand abroad increased at its weakest rate in six months.The services sector anticipated that this year’s progress would continue, as seen by the rise in the future activity sub-index from November’s four-month low, which is a crucial indicator of company optimism.However, the improved attitude was insufficient to spur significant job growth. Although it was still slow, the hiring pace picked up last month from November.
Firms got some relief from inflationary pressures as operating costs rose at the weakest pace since August 2020.
Data released Wednesday showed that India’s manufacturing sector index dipped to 54.9 in December but the strong services activity lifted the overall HSBC India Composite PMI Output Index to a three-month high of 58.5.
