NEW DELHI: Services sector activity expanded at the fastest pace in six months in January, as buoyant international and domestic demand contributed to rising new business orders, according to results of a private sector survey released Monday. HSBC India Services PMI Business Activity Index rose to 61.8 in January as compared with 59 in the previous month.
“India’s services PMI rose to a six-month high in January. New business expanded at a faster pace and managers’ expectation for future activity was strong,” said Ines Lam, economist, HSBC. Business confidence also improved and was the highest since September 2023, with firms expecting investment and productivity gains to produce growth.
Investment optimism indicates a good sign for the economy, as the government has been asking the private sector to pick up capex. In its interim budget, before the national elections, the government allocated ₹11.11 lakh crore to capex for FY25, 16.9% higher than revised estimates of FY24.
The growth in new export orders was the quickest in three months, with 400 service sector firms noting gains from clients in Afghanistan, Australia, Brazil, China, Europe, the UAE and the US. “The new export business index accelerated, signalling that India’s services exports remained robust,” Lam noted.
India’s services exports rose 3.5% in April-December compared with the previous year, according to preliminary estimates released by the ministry of commerce and industry last month.
While firms reported better business activity, they also had to deal with higher cost pressures, with the rate of input inflation rising at the quickest pace in five months.
“With the vast majority of panellists opting to leave their charges unchanged and only 6% hiking them, output prices rose to the least extent in 11 months,” the report noted. Consumer services reported the fastest rise in input inflation, whereas output inflation was highest for transport, information and communication sector.
“Employment also increased at a slight pace in January, albeit one that was the most pronounced in three months,” the PMI reading indicated. Manufacturing employment had remained broadly unchanged in January, despite rising orders.
“The manufacturing and services PMIs rebounded in January, signalling that growth momentum continues to hold up reasonably well. The upturn in the services sector was more pronounced than the manufacturing sector, as hard data shows some moderation in growth in industrial activity in December,” said Rahul Bajoria, head of EM Asia (ex China) economics, Barclays.
Source: The Economic Times
