Activity in India’s dominant services sector grew at its fastest pace in six months in December, buoyed by fresh business orders and signaling optimism about Asia’s third-largest economy.
(Bloomberg) — Activity in India’s dominant services sector grew at its fastest pace in six months in December, buoyed by fresh business orders and signaling optimism about Asia’s third-largest economy.
The S&P Global India Services Purchasing Managers Index rose to 58.5 last month from 56.4 in November, data showed Wednesday. Helped by a strong performance in the manufacturing sector, the composite index rose to 59.4 — the highest reading in 11 years.
A number above 50 reflects expansion in activity, while anything below denotes contraction.
New business received by Indian services companies increased for the seventeenth month in a row in December, the data showed, indicating robust demand.
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“December saw a welcome expansion in Indian services activity, underscoring the resilience of demand,” said Pollyanna De Lima, an economics associate director at S&P Global Market Intelligence, adding that firms signaled strong optimism for 2023.
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Input costs at services companies, however, rose further, with businesses worried about wage pressures and higher prices for energy, food and transport. The overall rate of inflation quickened from November and was above its long-run average, the data showed.
Rahul Bajoria, a senior economist with Barclays Bank PLC, said part of the buoyant activity in the manufacturing and services sectors was due to India’s festival season that starts around September and continues until November.
“However, intensifying growth headwinds are set to drive a modest slowdown in activity in the coming months,” he added.
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