India’s services sector growth expanded further in the month of December, with a quicker upturn in new business boosting output growth. More jobs were created and companies remained strongly upbeat towards the year-ahead outlook for business activity. As per the survey report, the seasonally adjusted S&P Global India Services PMI Business Activity Index surged to 58.5 in December from 56.4 in November. Further, the S&P Global India Composite PMI Output Index -- which measures both manufacturing and services -- improved to 59.4 in December from 56.7 in November.
The report noted that new business received by Indian services companies increased for the seventeenth month in a row in December. Moreover, the rate of expansion was sharp and the fastest since August. It further said that Indian service providers readjusted their capacities to accommodate for rising new business via further recruitment drives in December. The pace of job creation was above its long-run average, but eased to a five-month low.
On the inflation front, input costs at services companies rose further, with companies mentioning wage pressures and higher prices for energy, food and transportation. The overall rate of inflation quickened from November and was above its long-run average. By sector, input cost inflation was most acute in Consumer Services. As a result of a further increase in business expenses, firms lifted their own selling prices at the end of the year. The rate of charge inflation eased from November, but remained solid and historically elevated. Finance & Insurance topped the rankings for output charge inflation for the second month running.
Meanwhile, predictions of further improvements in demand and marketing plans continued to support business confidence in December. Companies were at their least upbeat in three months, but the overall level of positive sentiment remained above its long-run average. Competitive pressures and inflation concerns dampened overall optimism.
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