Services activity witnessed a sharp moderation in January, with the HSBC India Services PMI plummeting to a 26-month low of 56.5 during the month as against 59.3 in December, a release by S&P Global showed.
The decline in services’ activity expansion was in contrast with the uptick witnessed in manufacturing activity during January. Data released on Monday showed manufacturing PMI rising to a six-month high of 57.7 in January from 56.4 a month back.
A reading above 50 shows expansion in activity against the previous month, while a reading below shows contraction. The composite PMI, a weighted average of both services and manufacturing indices, plunged to a 14-month low of 57.7 in January from 59.2 in December.
Pranjul Bhandari, Chief India Economist at HSBC, said: “India’s services sector lost growth momentum in January, although the PMI remained well above the 50-breakeven level. That said, new export business partly countered the downtrend and continued to rebound from a dip in late-2024…”
According to the release, the rate of new business intakes for services firms rose at its slowest pace since November 2023, curbing the upturn in business activity. Companies attributed this deceleration to intense competition and a drop in customer numbers for some firms, said S&P Global.
The international sales saw a quicker increase compared to domestic trends. Survey participants reported gains from clients across various regions, including Asia, Europe, the Middle East, and the Americas, said S&P Global. This aspect of the market reached a five-month high, indicating that while domestic growth may have softened, opportunities abroad remained strong, it said.
On the inflation front, service providers faced rising cost burdens primarily due to increased payroll expenses and higher food prices. As a result, charge inflation also ticked upward, reflecting these costs being passed on to consumers, S&P Global said.
