India's services sector growth increased to a 4-month high in December as strong demand strengthened business activity with strong job creation taking place during the month, according to a survey released on Monday.
The HSBC India Services Purchasing Managers' Index, compiled by S&P Global (NYSE:SPGI), increased to 59.3 in December from 58.4 in November, which is the highest level since August.
Strong underlying demand was seen by firms as the principal factor driving services sector output growth. In other cases, members of the survey said that the efforts recently undertaken to increase capacity allowed them to take on additional work.
The overall level of positive sentiment remained above its long-run average, with service providers exuding confidence that output would increase over the course of the coming 12 months. Expanded capacities, new customer enquiries and budget allocation towards marketing were some of the positive factors propelling growth.
Although services companies continued to see their business expenses rising in December, the rate of inflation softened from November's 15-month high. Reflecting a further increase in input costs, service providers raised their own fees again in December.
New business growth, upbeat forecasts and capacity pressures continued to support another round of job creation across the services sector. Firms added workers at one of the strongest paces since the survey started in 2005. But hiring was a tad lower than November's 19-year high.
International orders with service providers did increase significantly during December and, therefore, seem to hold much promise for employment and growth in the following months.
"The forward-looking indicators of new business and future activity suggest that this performance is likely to continue over the near term," said economist at HSBC Ines Lam.
The robust growth in services activity also offset a decline in manufacturing growth and boosted the overall Composite PMI to 59.2 during December from 58.6 in November, boosting the overall economic growth rate.
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