The seasonally adjusted HSBC Services Business Activity Index posted 57.5 in January, up from 55.6 in December. This signalled a sharp expansion in output, and one that was the fastest since January last year. According to panel members, business activity increased in tandem with rising volumes of incoming new work. Growth in activity has how been sustained for 15 successive months.
As has been observed since May 2009, total new business in the Indian private sector increased during January. The overall rate of expansion was sharp and the fastest in 11 months. Whereas growth in the manufacturing sector eased, services new orders rose at the fastest pace in 18 months.
The level of unfinished work at private sector firms in India rose slightly during January. Panellists stated that production growth and persistent power shortages both fed through to the latest rise in backlogs of work.
Payroll numbers in the Indian private sector rose for the eleventh month running in January, amid evidence of increased volumes of incoming new work. That said, the rate of job creation was only slight and broadly in line with that seen in December.
Commenting on the India Services PMITM survey, Leif Eskesen, Chief Economist for India & ASEAN at HSBC said:
"Service sector activity continued to pick up pace led by a faster inflow of new business. With stepped up hiring, companies broadly managed to contain the rise in backlogs of work. Inflation readings held broadly steady, with fuel, raw material and labour cost pressures still simmering. These numbers underscore the need for the RBI to approach policy easing with caution."