India services activity ticks up in January, PMI shows

BENGALURU: Activity in India's dominant services sector rebounded in January after hitting an 11-month ‍low in December, driven by ​a rise in new business, though job creation was almost ⁠stagnant, a private survey showed on Wednesday.

HSBC's India Services Purchasing Managers' Index (PMI) , compiled by S&P Global, rose to 58.5 in January from 58.0 in December. While the reading marked the 54th consecutive month of ‌expansion, the ‌longest streak since the survey began in 2005, it fell short of the preliminary estimate of 59.3.The pickup in ‌activity was driven by an acceleration in new business, a key gauge of demand, which expanded at its fastest pace since November. Firms attributed the rise to a stronger online presence and aggressive marketing efforts that helped boost sales.

"Robust output growth was driven by a ​steady influx of new orders, including increased international demand ​from South and Southeast Asia," said Pranjul Bhandari, chief India economist at HSBC.


Demand was ‌also supported ‍by an improvement in overseas orders. New export business grew at ‍its fastest pace in three months, with survey respondents citing ‌increased demand from Indonesia, Qatar, Sri Lanka and Vietnam.

Survey data was collected between January 9 and 28. Late last month, India signed a trade deal with the European Union, while on Monday U.S. President Donald Trump announced an agreement slashing U.S. tariffs on Indian goods to 18% from 50%, pointing to potential upside for exports in coming months.

Despite demand picking up slightly, hiring remained subdued. Employment ‍returned to growth after contracting in December, but the pace of job creation hovered just above the 50 mark, signalling near-stagnation in labour ‍market conditions.

At the ⁠same time, inflationary pressures ⁠edged higher. Input costs rose at their fastest pace since September, driven by higher prices for food, electronics and paper, prompting service providers to pass on part of the increase to customers. As a result, output charges climbed to a three-month high.

Looking ahead, business confidence improved, with sentiment about the year-ahead outlook rising to a three-month high on expectations of efficiency gains and new client wins.

Reflecting the broader momentum, the HSBC India Composite PMI- which combines services and manufacturing rose to 58.4 in January from 57.8 in December.