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New Delhi: India's services sector growth expanded at its fastest pace in three months in December on the back of buoyant demand and an optimistic year-ahead outlook, an industry survey by S&P Global showed.
India’s Purchasing Managers' Index (PMI) for services rose sharply to 59 in December from a one-year low of 56.9 recorded in the previous month.
Demand buoyancy spurred sales, subsequently fuelling business activity. "India's services sector ended the year on a high note, with an uptick in business activity," said Pranjul Bhandari, chief India economist at HSBC.
Services firms in India expect the strong demand momentum to carry forward to 2024 which, coupled with advertising and better customer relationships, underpinned upbeat forecasts for output. "The overall degree of business optimism was strong and better than that seen in November," S&P Global noted in the monthly report.
The robust year-end expansion in the services sector was supported by continued growth of international sales. Service providers noted higher demand from clients based in Australia, Canada, Europe, the Middle East and South America during December.
Amid reports of higher prices paid for food and some other inputs, the average expense of services firms continued to increase at the end of the third fiscal quarter.
"Input costs rose at a slower pace than in November, continuing the softening trend which began in mid-2023. But output prices rose at a faster pace, indicating improved corporate margins in December," said Bhandari.
There was a mild pick-up in charge inflation during December. The rate of increase in prices charged for the provision of services in India during the month under review was higher than its long-run average and faster than that seen for input costs.
Robust expansion led to creation of new jobs in the sector. Survey participants indicated that new workers were hired on both full- and part-time bases during the month.
Services PMI data is a survey-based indicator on the health of the sector based on responses from around 400 service sector companies spread across the country. The report comes a couple of days after the release of manufacturing sector data that indicated sluggish growth. Manufacturing PMI growth slipped to 18-months low in December on weak demands.