India's services sector ended 2024 on a strong footing, PMI shows

Activity in the sector has been in expansionary territory for more than three years

By Reuters

Published: Mon 6 Jan 2025, 9:51 PM

India's dominant services sector ended 2024 on a high note as sustained demand boosted activity to a four-month high and led to strong hiring in December, while inflationary pressures eased, a survey showed.

The HSBC final India Services Purchasing Managers' Index , compiled by S&P Global, rose to 59.3 in December from 58.4 in November, its highest since August but lower than a preliminary estimate of 60.8.

Activity in the sector has been in expansionary territory for more than three years. A 50-mark separates contraction from growth.

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The new business sub-index — a gauge of demand — rose at the fastest pace in four months. It was also supported by solid global demand.

High demand and expanded capacities kept confidence high for the year ahead. Business optimism stayed firm and above last year's average but below November's six-month high.

"Forward-looking indicators such as new business and future activity suggested that the strong performance will likely continue in the near future," noted Ines Lam, economist at HSBC.

Soaring business confidence resulted in robust hiring. Firms continued to add workers at one of the strongest paces since the survey began in 2005. But it slowed from November's 19-year high.

Inflationary pressures eased as both the sub-indexes, input prices and prices charged, fell. Input prices eased from November's 15-month high but were still elevated as firms paid more for food, labour and material.

Service providers passed on some of the extra costs to their clients, although at a slower pace than a near 12-year high in November.

"The easing of input price inflation in the month also supported business sentiment. Strength in the services PMI stands in contrast with the growing signs of a slowdown in the manufacturing industry," added Lam.

Strong growth in services activity offset a decline in manufacturing growth and boosted the overall Composite PMI to 59.2 last month from 58.6 in November.