Services PMI Rises To Four-Month High Of 59.3 In December

The seasonally adjusted HSBC India Services Business Activity Index rose from 58.4 in November to 59.3 in December, highlighting the strongest rate of expansion in four months, according to a release on Monday. At 59.2 in December, up from 58.6 in November, the HSBC India Composite Output Index too signaled the strongest rise for four months.

Buoyant underlying demand was identified by companies as the primary factor behind output growth in the service sector. Not only did new orders increase for the forty-first month in a row, but also to the greatest extent since August 2024. In some instances, survey members indicated that recent efforts to expand capacities allowed them to accept more work.

The overall level of positive sentiment fell from November's six-month high, but remained above its long-run average. Service providers remained confident that output would increase over the course of the coming 12 months. Expanded capacities, new customer enquiries and budget allocation towards marketing were some of the tailwinds cited by firms.

Although services companies continued to see their business expenses rising in December, the rate of inflation softened from November's 15-month high. Reflecting a further increase in input costs, service providers raised their own fees again in December. The rate of charge inflation remained above its long-run trend, despite slowing from November.

The combination of new business growth, upbeat forecasts and rising capacity pressures supported another round of job creation across the service economy. The rate of employment growth softened from November, but was sharp and among the strongest seen since data collection began in December 2005.

Finally, there was a solid increase in international orders placed with service providers during December. Growth nevertheless retreated to a three-month low.