Written by Shalu Shrivastava
BENGALURU (Reuters) – India's dominant services sector ended 2024 on a high note as sustained demand boosted activity to a four-month high and led to strong hiring in December, while inflationary pressures eased, a survey showed.
The final HSBC Services Purchasing Managers' Index for India, compiled by S&P Global, rose to 59.3 in December from 58.4 in November, its highest level since August but below the initial estimate of 60.8.
Activity in this sector has remained in expansionary territory for more than three years. The 50 mark separates contraction from growth.
The new business sub-index – a measure of demand – rose at the fastest pace in four months. It was also supported by strong global demand.
High demand and increased capacity have kept confidence high for next year. Business optimism remained strong and above last year's average but below the six-month high recorded in November.
“Forward-looking indicators such as new business and future activity suggest that the strong performance will likely continue in the near future,” noted Ines Lam, an economist at HSBC.
Rising business confidence has led to strong hiring. Companies continued to add workers at one of the strongest paces since the survey began in 2005. But they slowed from a 19-year high in November.
Inflationary pressures declined with sub-indices, input prices, and imposed prices declining. Input prices have fallen from the highest levels in 15 months recorded in November, but remain high as companies pay more for food, labor and materials.
Providers passed on some additional costs to their customers, although at a slower pace than the 12-year high in November.
“The decline in input price inflation in the month also supported business sentiment. The strength of the services PMI contrasts with growing signs of a slowdown in the manufacturing industry,” Lam added.
Strong growth in services activity was offset by a decline in manufacturing growth and the overall composite PMI strengthened to 59.2 last month from 58.6 in November.
