Services activity hits four-month high

India's services activity surged to a four-month high of 59.3 in December, from 58.4 in November, as strong demand drove business expansion and output growth, according to the HSBC PMI survey released on Monday.

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

New orders rose for the 41st consecutive month in December, clocking the highest increase since August 2024, showed the HSBC India Services Business Activity Index report.

Sector-wise, finance and insurance recorded the largest increase in new orders and business activity, spurring new job creation. While employment growth slowed from November, it remained the strongest since data collection began in December 2005.

"Strength in the services purchasing managers index (PMI) stands in contrast with the growing signs of a slowdown in the manufacturing industry," said Lam.

Manufacturing PMI dropped to a 12-month low of 56.4 in December, according to data released last week.

There was relief on the price front too with ease in selling price inflation.

While service companies faced rising expenses, inflation rate eased from November's 15-month high. "Anecdotal evidence suggested that firms paid more for food, labour and material," the survey mentioned.

Of the four sectors surveyed, consumer services firms experienced the strongest cost pressures.

Service providers raised their fees again in December. Despite slowing from November, the rate of charge inflation remained above its long-run trend, according to the survey. Transport, information and communication category reported the highest charge inflation, it added.

International orders also increased in December; however, the growth was at a three-month low.