Growth in services activity decelerated in January from a six-month peak in December but still remained well above a long-term average, propped up by sustained flow of fresh business orders from the domestic market.
The seasonally adjusted S&P Global India Services PMI Business Activity Index hit 57.2 in January, compared with 58.5 in the previous month. The long-term average stands at 53.5. An index reading of 50 or above suggests expansion and below it points at contraction. The manufacturing PMI had eased to 54 in January from 55.5 in the previous month.
Services output and sales rose at a slightly lower but still strong pace while input cost inflation hits a two-year low. The increase in output charges, consequently, remained the weakest since March 2022, S&P Global said in a release.
There were mild capacity pressures among companies, as backlogs rose further, but there was little change to employment levels.
“Indeed, new orders placed with services companies continued to increase at the start of the fourth fiscal quarter. The rise took the current stretch of monthly expansions to a year-and-a-half and was sharp, despite slowing from December,” according to the release.
Favourable economic conditions, accommodative demand and marketing efforts supported sales, it said. The rise in total new business was centred on the domestic market, as international (export) orders fell. The fall was only marginal, but compared with the strongest upturn for almost three-and-a-half years in December.
Outstanding business volumes rose for the 13th month in a row in January, and at the quickest rate since August 2022. “That said, the latest accumulation was moderate as fewer than 3% of firms saw growth and the remaining no change,” as per the release. January data pointed to another sharp expansion in private sector activity across India. The S&P Global India Composite PMI Output Index eased from December’s near 11-year high of 59.4 to 57.5, but it remained above its long-run average (54.1).
Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said: “The latest results highlighted some caution among service providers, partly evidenced from the vast majority of firms predicting no change in output from present levels. This somewhat subdued level of confidence towards the outlook appeared to have stymied job creation in January.”
