Services sector activity in India expanded in January on the back of increase in new business orders amid “solid” demand conditions, an HSBC survey said today.

The HSBC India Services Business Activity Index, which tracks changes in activity at Indian services companies on a monthly basis, stood at 52.4 in January, up from 51.1 in December, signalling a solid expansion in business activity.

A score above 50 indicates that the sector is expanding, while a figure below that level means contraction.

“The January Services PMI was marked by faster expansions in activity and new orders,” HSBC India Chief Economist Pranjul Bhandari said.

This is the ninth consecutive month of sustained growth of new business orders among Indian services companies which was largely driven by higher new work inflows amid “solid” demand conditions and new marketing initiatives.

Moreover, Indian service providers were the most upbeat regarding the 12-month outlook for activity since mid-2014 in January. Panel members attributed optimism to anticipated improvements in demand and new commercial initiatives.

Despite solid growth of activity and new business orders, payroll numbers in the Indian service sector rose only fractionally in January.

Meanwhile, the headline HSBC Composite Output Index — that maps manufacturing as well as services sectors output — rose from 52.9 in

December to 53.3 in January, signalling further growth of private sector output in January.

On prices, the report said input costs faced by Indian services firms rose for the second straight month in January.

“On the inflation front, both input and output prices rose further, though at a modest pace when compared to historical trends,” Bhandari said.

She added that “we expect RBI to cut rates by a total of 75 bps in 2015, but no further as latent inflation pressures could pick up when growth sees a meaningful lift.”

The Reserve Bank had yesterday left interest rates unchanged, saying there was no substantial development on inflation or fiscal fronts to warrant a fresh reduction.

This stance follows a surprise rate cut by RBI on January 15 to tackle dis-inflationary pressure.

Accordingly, the RBI left the short-term lending rate (or repo rate) at 7.75 per cent and the cash balance requirement on the lenders (or CRR) at 4 per cent.

HSBC PMI: Indian services growth picks up pace in January

(Reuters) Growth among India’s services firms picked up pace in January as burgeoning order books boosted confidence, suggesting further expansion this month, a business survey showed on Wednesday.

The HSBC Services Purchasing Managers’ Index (PMI) , compiled by Markit, rose to 52.4 in January from 51.1 in December. It has been above 50 level, which denotes growth, since May 2014.

The new business sub-index – which measures demand – climbed to 52.1 from 51.8. The survey also showed firms’ confidence regarding future business grew at the fastest pace since June last year.

“The January Services PMI was marked by faster expansions in activity and new orders,” said Pranjul Bhandari, chief India economist at HSBC.

“Business sentiment led by anticipated improvements in demand and new commercial initiatives, rose to a seven-month high.”

The Reserve Bank of India held interest rates steady on Tuesday, while boosting banks’ liquidity in a bid to persuade them to lower lending rates after they failed to pass on the benefits of the last official rate cut three weeks ago.

The central bank’s surprise quarter-point cut in January was a clear sign inflation was easing.

But the services PMI data showed input costs rose at a faster rate in January and that firms were able to pass on a slightly bigger portion to customers by raising prices.