India’s services PMI increased to 58.5 in December, compared to November’s 56.4, according to S&P Global PMI data. The report stated that the health of the Indian service sector improved in the last month of 2022, with a quicker upturn in new business boosting output growth. It said that more jobs were created and companies remained upbeat towards the year ahead.
“There was a sharp rise in firms’ expenses — amid greater energy, food, staff and transportation costs — which led to a further increase in prices charged for the provision of services,” it said.
The December PMI recorded the strongest rate of expansion since mid-2022. Companies credited robust intake of new work and favourable market conditions for this growth.
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said: “December saw a welcome expansion in Indian services activity, underscoring the resilience of demand as 2022 came to an end. As we head into 2023, companies signalled strong optimism towards the outlook for output.”
Around 31 per cent of panelists forecast growth, while 2 per cent anticipated a contraction, said De Lima. “Inflation trends were mixed, as input prices rose at a faster pace and the upturn in charges moderated. On the expense front, services firms reported pressure from energy, food, staff and transportation costs. Although easing from November, the rate of output charge inflation remained elevated as several companies felt the need to transfer escalating costs through to clients,” she said.
Indian services companies’ new business increased for the 17th month in a row. The rate of expansion was sharp and the fastest since August.
Finance & Insurance was the best-performing sector when it came to sales, showed granular data, while Real Estate & Business Services saw the slowest expansion in new orders. The overall rate of inflation quickened from November and was above the long-run average.
Firms increased their selling prices at the end of the year as a result of increase in business expenses.
“Indian service providers readjusted their capacities to accommodate for rising new business via further recruitment drives in December. The pace of job creation was above its long-run average, but eased to a five-month low. Although capacities came under pressure from robust intakes of new work, December data pointed to only a mild increase in outstanding business,” the report said.
The S&P report stated that companies were at their least upbeat in three months, but the overall level of positive sentiment remained above its long-run average.