India’s services growth hits three-month high in December as demand picks up – PMI
Bengaluru: India’s services sector ends 2023 on a strong note, with activity expanding fastest speed in three months in December enthusiastic demand and an optimistic year-ahead outlook, a private survey Has shown.
The HSBC India Services Purchasing Managers’ Index, compiled by S&P Global, rose sharply to 59.0 in December from a one-year low of 56.9 in November.
This is the 29th month of expansion, with the index well above the 50-mark that separates growth from contraction.
“India’s services sector ended the year on a high, driven by a pick-up in business activity led by a three-month high new orders index,” said Pranjul Bhandari, chief India economist at HSBC.
Favorable economic conditions and upbeat demand pushed the new business sub-index above a one-year low in November. However, international demand grew at the slowest pace in six months.
Services companies expect momentum to remain strong this year, indicated by a rise in the future activity sub-index – a key gauge for business optimism – from a four-month low in November.
But the bright sentiment was not enough to spur strong job creation. Last month, the pace of appointments increased from November but remained slow.
Companies got some relief from inflation pressure as operating costs rose at the weakest pace since August 2020.
Still, they passed the additional costs on to customers at a rapid pace. This was the first time in three years that the rate of output price inflation exceeded input costs, indicating improvement in corporate margins.
The latest Reuters survey showed that inflation in India was expected to remain within the Reserve Bank of India’s (RBI) target range of 2-6% this fiscal year and the next. The RBI is expected to cut interest rates in the third quarter of this year, around the same time as a cut by the US Federal Reserve, according to a separate Reuters survey.
While the manufacturing sector index released on Wednesday fell to 54.9 in December, strong services activity lifted the overall HSBC India Composite. PMI Output index at three-month high of 58.5.
(Reporting by Shalu Srivastava; Editing by Sri Navaratnam)
The HSBC India Services Purchasing Managers’ Index, compiled by S&P Global, rose sharply to 59.0 in December from a one-year low of 56.9 in November.
This is the 29th month of expansion, with the index well above the 50-mark that separates growth from contraction.
“India’s services sector ended the year on a high, driven by a pick-up in business activity led by a three-month high new orders index,” said Pranjul Bhandari, chief India economist at HSBC.
Favorable economic conditions and upbeat demand pushed the new business sub-index above a one-year low in November. However, international demand grew at the slowest pace in six months.
Services companies expect momentum to remain strong this year, indicated by a rise in the future activity sub-index – a key gauge for business optimism – from a four-month low in November.
But the bright sentiment was not enough to spur strong job creation. Last month, the pace of appointments increased from November but remained slow.
Companies got some relief from inflation pressure as operating costs rose at the weakest pace since August 2020.
Still, they passed the additional costs on to customers at a rapid pace. This was the first time in three years that the rate of output price inflation exceeded input costs, indicating improvement in corporate margins.
The latest Reuters survey showed that inflation in India was expected to remain within the Reserve Bank of India’s (RBI) target range of 2-6% this fiscal year and the next. The RBI is expected to cut interest rates in the third quarter of this year, around the same time as a cut by the US Federal Reserve, according to a separate Reuters survey.
While the manufacturing sector index released on Wednesday fell to 54.9 in December, strong services activity lifted the overall HSBC India Composite. PMI Output index at three-month high of 58.5.
(Reporting by Shalu Srivastava; Editing by Sri Navaratnam)
