Services PMI hits 6-month high of 61.8 in Jan

India's predominant services sector demonstrated its expansion in January, hitting six months high of 61.8, propelled by strong demand, as indicated by a business survey. The survey also revealed that output prices experienced their slowest rate of increase since February 2023, and optimism reached a four-month peak.

This upswing was reinforced by the most rapid surge in new business since July of the previous year, driven by robust demand from both domestic and international clients.

“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,” the survey states.

These findings suggest that India is likely to maintain its status as the fastest-growing major economy in the coming months, alleviating pressure on the government and allowing it to focus on fiscal consolidation in the upcoming year.

The HSBC final India Services Purchasing Managers' Index surged to 61.8 last month, surpassing December's 59.0. The HSBC India Composite PMI Output Index rose from 58.5 in December to 61.2, indicating the sharpest upturn since mid-2023. The current sequence of uninterrupted increases was stretched to two-and-a-half years. According to survey participants, growth was spurred by demand buoyancy, productivity gains and rising intakes of new work.

Similarly, sales in the private sector increased at the most rapid rate in half a year. While service providers spearheaded the upswing, both sectors exhibited accelerated growth in new business. Employment in the service sector showed a positive trend, maintaining growth, whereas factory jobs remained largely unchanged. On a composite level, the number of employees on payrolls saw an increase comparable to that in December. Additionally, the prices charged for Indian goods and services experienced the slowest rate of ascent in a period of ten months.

New business placed with Indian service providers increased at the fastest rate in six months during January. Advertising, positive demand trends and new client wins reportedly fuelled sales. Underlying data also showed a notable upturn in new export orders at Indian service providers in January. Advertising, positive demand trends and new client wins reportedly fuelled sales.

“Monitored firms signalled gains from clients across the globe, including Afghanistan, Australia, Brazil, China, Europe, the UAE and the US. 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,” it adds.