India Services Sector Grows Sharply With 61.2 PMI In January

Indian service providers reported a sharp and accelerated expansion in business activity during January, stretching the current run of growth to two-and-a-half years. The upturn was cemented by the quickest increase in new business since last July, which stemmed from buoyant demand from domestic and external clients. New export sales rose at the fastest pace in three months.

Companies noted a further increase in their overall expenses at the start of the 2024 calendar year, with food, labour and freight identified as the key sources of cost pressures. That said, even with input price inflation reaching a five-month high, selling charges were raised to a lesser extent.

 

At 61.8 in January, up from 59.0 in December, the seasonally adjusted HSBC India Services PMI Business Activity Index was comfortably above the neutral level of 50.0 and pointed to the sharpest rate of expansion in six months.

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. Business confidence improved further at the start of the final fiscal quarter, with services companies at their most upbeat since last September. Besides demand strength, firms expect investment and productivity gains to induce output growth in the year ahead.

January data highlighted a further acceleration in growth of Indian private sector output, amid quicker increases at both goods producers and service providers. The HSBC India Composite PMI Output Index rose from 58.5 in December to 61.2, indicating the sharpest upturn since mid-2023. Similarly, private sector sales rose at the quickest pace in six months.

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