India’s Services Sector Ends 2024 Strong Amid Eased Inflation Pressures
New Delhi: Signalling significant growth in the country’s services sector, India’s services activity rose to a four-month high of 59.3 points in December, an increase from 58.4 points recorded in November. However, the sector ended 2024 on a high note as demand boosted with strong hiring in the same month, while inflationary pressures eased to some extent, a private survey showed on Monday.
The seasonally adjusted HSBC India Services Business Activity Index, however, showed that the index rose from 58.4 in November to 59.3 in December, highlighting the strongest rate of expansion in four months. “Demand buoyancy continued to drive new business inflows higher, which in turn supported output growth and prompted firms to recruit additional workers,” the survey showed.
In the Purchasing Managers’ Index or PMI parlance, a print above 50 means expansion, while a score below 50 denotes contraction. “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 would likely continue in the near future,” said Ines Lam, economist at HSBC.
On the price front, the survey also showed that there was a softer increase in cost burdens, though panellists continued to report greater outlays on food, labour and materials. Selling price inflation also eased in December. “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,” Lam noted.
India’s manufacturing sector growth fell to a 12-month low in December with new business orders and production expanded at softer rates, but the service providers remained 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,” it said.
The survey further said 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,” the survey said.
