New Delhi [India], January 6 : India's services sector ended 2024 on a strong note, with the HSBC India Services Business Activity Index rising from 58.4 in November to 59.3 in December, according to the HSBC PMI survey.
The index, which measures monthly changes in business activity, recorded its strongest expansion in four months, reflecting robust growth momentum in the sector.
The survey attributed the growth to continued buoyancy in demand, which boosted new business inflows and output. As a result, service providers hired more workers to meet rising demand.
It said "the level of business activity compares with the situation the month before - rose from 58.4 in November to 59.3 in December, highlighting the strongest rate of expansion in four months".
Despite a slight moderation in the employment growth rate compared to November, the pace of job creation was among the highest recorded since data collection began in December 2005.
The survey also noted that the finance and insurance led the sub-sectors, registering the strongest increases in both new orders and business activity. Companies across the services sector remained optimistic about future growth, with confidence levels above the long-term average.
Expanded capacities, new customer enquiries, and budget allocations toward marketing were some of the key factors driving this positive outlook.
On the pricing front, the survey highlighted a softer increase in input costs, although higher expenses for food, labour, and materials were still reported. Similarly, selling price inflation eased in December, providing some relief to customers.
The survey also pointed to a solid increase in international orders placed with Indian service providers. However, the growth in foreign demand retreated to a three-month low.
The HSBC India Composite Output Index, which combines services and manufacturing activity, rose to 59.2 in December from 58.6 in November, signalling the fastest overall rise in private sector output in four months. The acceleration was driven by the services sector, which outpaced the manufacturing sector, where production growth softened during the same period.
Despite the strong performance, there was a slight dip in overall business sentiment compared to November's six-month high. However, the outlook for business activity remains positive, supported by new business growth, expanded capacities, and rising demand pressures.
The survey highlights the resilience of India's service economy, which continues to benefit from robust domestic and international demand.
As 2025 begins, industry experts will be watching for sustained growth trends and the sector's ability to maintain its momentum in the face of evolving global and domestic economic conditions.