India’s services expanded sharply in January on account of buoyant domestic and external demand conditions. The HSBC India Services Purchasing Managers’ Index (PMI) rose to a six-month high of 61.8 in January from 59.0 in December.
December marked the sixth month, services PMI has crossed the 60 mark. The services PMI is an indicator, compiled by S&P Global, which measures changes in services activity in the country as compared to the previous month. A reading above 50 denotes expansion in services activity, while a reading below points to contraction.
Ines Lam, economist at HSBC, said: “new business expanded at a faster pace and managers’ expectation for future activity was strong. The new export business index accelerated, signalling that India’s services exports remained robust.”
Data released last week showed that manufacturing PMI hit a four-month high of 56.9 in January, indicating growth momentum continues to hold up reasonably well. The composite PMI – weighted average of manufacturing and services PMI – rose to 61.2 in January from 58.5 in December.
S&P Global said that new business placed with Indian service providers increased at the fastest rate in six months during January. “Underlying data also showed a notable upturn in new export orders at Indian service providers in January, the strongest in three months,” it said. Firms signalled gains from Afghanistan, Australia, Brazil, China, Europe, UAE and the US.
On the prices front, amid reports of higher food, freight and salary costs, there was another increase in the overall expense of Indian services companies in January. Granular data showed that consumer services by far led the rise in input costs, but it was in transport, information & communication that the quickest increase in selling prices was registered, S&P Global said. But output prices were largely left unchanged.
At the composite level, the rate of input price inflation picked up, largely due to a substantial pick-up in cost pressures in the service economy, said S&P Global.
