India’s services sector grew at the fastest pace in six months in January as business confidence gained strength and new export sales rose at the fastest pace in three months.
Services purchasing managers’ index (PMI) climbed to 61.8 in January, according to the HSBC India Services PMI.
Participants in the survey said demand buoyancy, productivity gains and rising intakes of new work spurred growth, while advertising, positive demand trends and new client wins fuelled sales.
“India’s services PMI rose to a six-month high in January. New business expanded at a faster pace and managers’ expectation for future activity was strong. The new export business index accelerated, signaling that India’s services exports remained robust,” Ines Lam, economist at HSBC, said.
In January, service providers saw a significant rise in new export orders, the highest in three months, with businesses receiving more work from international clients in countries like Afghanistan, Australia, Brazil, China, Europe, the UAE, and the US.
Service companies began the last quarter of the fiscal year with increased optimism, the highest since September, driven by strong demand, and anticipating growth in investment and productivity to boost output in the coming year.
However, January also brought increased costs for Indian services companies, particularly in food, shipping, and wages, marking the highest inflation rate in five months and exceeding the long-term average.
Despite these rising costs, most companies chose not to raise their prices, with only 6% doing so, leading to the smallest rise in output prices in 11 months.
Consumer services saw the most significant rise in input costs, while the transport, information and communication sector noted the sharpest increase in selling prices.
On the operations side, service providers continued to see growth in business volumes, which supported job creation in January. Although the increase in backlogs was modest, it accelerated to a five-month high. Employment grew slightly in January, marking the most notable rise in three months.
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