Business activity among Indian services companies accelerated for the second consecutive month in January, and reached the highest level since September 2008. The HSBC Markit Business Activity Index for services rose to 58.96 in January, primarily due to considerable expansion in output, which, in turn, was led by higher volumes of new business.
The growth was sharp but is little changed from the growth recorded in December when the index stood at 57.41.
However, the report stated that the growth in services continued to be weaker than its pre-downturn average.
“The key business activity index continued its march deeper into expansionary territory in January and is once again consistent with double-digit output growth in India’s service sector,” said Robert Prior-Wandesforde, senior Asia economist, HSBC.
With the manufacturing PMI also strengthening further over the last couple of months, the report states that industry including services seems to have shaken the spillover effects from a drought-ravaged agricultural sector.
“After a relatively soft quarter of gross domestic product (GDP) growth in October-December last year, we expect the economy to be back on track in the final quarter of the fiscal year and expand 8.5 per cent in 2010/11,” Prior-Wandesforde adds.
Incoming new work to the Indian service sector increased for the ninth consecutive month in January. Employment at Indian service providers also increased for the tenth consecutive month. The growth in employment in the services sector is significantly better than that in the manufacturing sector, which has witnessed marginal increase in employment during the month.
Moreover, the report stated that the service firms raised their charges in January either to expand profit margins or to pass on part of their greater cost burdens to customers.
