India's Services Sector Shows Resilient Growth On Robust Demand

India's services industry saw activity increase at the fastest pace in six months during the final month of 2022 amid robust demand, fueling business optimism despite high costs, a private-sector survey showed. The seasonally adjusted S&P Global India Services PMI Business Activity Index rose from 56.4 in November to 58.5 in December, highlighting the strongest rate of expansion since mid-2022. Companies commonly linked the upturn to robust intakes of new work and favorable market conditions.

December data highlighted an improvement in the health of the Indian service sector, with a quicker upturn in new business boosting output growth. More jobs were created and companies remained strongly upbeat towards the year ahead outlook for business activity. There was a sharp rise in firms' expenses amid greater energy, food, staff and transportation costs which led to a further increase in prices charged for the provision of services. Input costs at services companies rose further, with companies mentioning wage pressures and higher prices for energy, food and transportation. The overall rate of inflation quickened from November and was above its long-run average. By sector, input cost inflation was most acute in Consumer Services.

Indian private sector firms signaled a strong performance at the end of 2022, with manufacturers and service providers recording faster expansions in output. Rising from 56.7 in November to 59.4 in December, the S&P Global India Composite PMI Output Index highlighted the quickest rate of growth since January 2012.

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