NEW DELHI: India’s services sector remained strong in the month of December with HSBC India Services Business Activity Index, or services PMI for the month at 59.3, highlighting the strongest rate of expansion in four months. The services sector ended the year 2024 on a strong footing, on demand buoyancy that continued to drive new business inflows higher, which in turn supported output growth and prompted firms to recruit additional workers. Survey participants were also strongly upbeat regarding the year-ahead outlook for business activity, reported the HSBC India Services PMI, compiled by S&P Global. In November, the services PMI was at 58.4, down fractionally from 58.5 in October.
On the price front, the report said, there was a softer increase in cost burdens, though panellists continued to report greater outlays on food, labour and materials. Selling price inflation likewise eased in December.
Ines Lam, Economist at HSBC, said, “India’s services companies expressed strong optimism in December as business activity growth surged to a four-month high. Forward-looking indicators such as new business and future activity suggested that the strong performance will likely continue in the near future. The easing of input price inflation in the month also supported business sentiment. Strength in the services PMI stands in contrast with the growing signs of a slowdown in the manufacturing industry.”
The HSBC PMI survey also showed that companies identified buoyant underlying demand as the primary factor behind output growth. It said that not only did new orders increase for the forty-first month in a row, but also to the greatest extent since August 2024.
In terms of sectors, Finance & Insurance again registered by far the strongest increases in both new orders and business activity at the sub-sector level.
The survey report maintained that service providers were confident that output would increase over the course of the coming 12 months. The overall level of positive sentiment fell from November’s six-month high, but remained above its long-run average. Expanded capacities, new customer enquiries and budget allocation towards marketing were some of the tailwinds cited by firms.
Reflecting a further increase in input costs, service providers raised their own fees again in December. The rate of charge inflation remained above its long-run trend, despite slowing from November.
Out of the four sectors covered by the survey, the HSBC report said that cost pressures were by far strongest at Consumer Services firms. Charge inflation was highest in the Transport, Information and Communication category. Further, it added that the combination of new business growth, upbeat forecasts and rising capacity pressures supported another round of job creation across the service economy. “The rate of employment growth softened from November, but was sharp and among the strongest seen since data collection began in December 2005,” it said.
Finally, it concluded that there was a solid increase in international orders placed with service providers during December. Growth nevertheless retreated to a three-month low.
Source: The Financial Express
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