Services PMI shows surge in Dec., private sector output growth rises to 11-year high
- India’s services sector reported a sharp growth in new business in December, led by finance and insurance services, as per the S&P Global India Services Purchasing Managers’ Index (PMI).
Highlights
- The index rose to 58.5 last month from 56.4 in November 2022.
- A reading of 50 on the index indicates no change in business activity levels.
- This is the 17th month in a row that new orders grew for services firms and the uptick was sharpest since August 2022, as per the survey-based PMI Business Activity Index, which reflected the strongest pace of overall growth in services since mid-2022.
What does the Data Say?
- India Composite PMI Output Index decreased from 56.7 in November to 59.4 in December, marking the quickest rate of growth for India’s private sector since January 2012.
- Real estate and business services saw the slowest expansion even as input cost inflation accelerated from November’s levels, with firms mentioning wage pressures and higher prices for energy, food and transportation.
- Consumer services were hit the most by this surge in input cost inflation, while financial and insurance services firms enhanced their charges by the most extent for the second successive month.
- The services sector continued to scale up hiring to keep pace with the upturn in output and business, but the extent of job creation dropped to a five-month low.
Inflation Trends
- “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 and several companies felt the need to transfer escalating costs through to clients.
- Aggregate sales rose sharply and at the fastest pace since August, boosted by quicker expansions at goods producers and services companies
Prelims Take Away
- PMI