India’s Service Activity Rises To Fourth Month High At 59.3 In December

Accelerating to highest level in four months, India’s service activity, measured by Purchasing Manager’s index (PMI) rose to 59. 3 December, up from 58. 4 in the previous month.

The surge is attributed to demand floatability that helped improved the condition. The number are released by a private sector sector survey released on January 6.

“Forward-looking indicators such as new business and future activity suggested that the strong performance will likely continue in the near future,” said Ines Lam, Economist at HSBC, reported by a media platform.

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Notably, the HSBC India’s Services Business activity remained above 58 for third consecutive month, however, service activity in the quarter dipped to a four quarter low.

The services activity performed better than manufacturing which reached to 12-month low at 56.4 in December.

It is anticipated that India’s economy will perform better in third quarte, particularly compared to July-September quarter when growth plummeted to nearly two years low at 5.4 percent.

Inflation was also subdued compared with the previous month, but higher fees for inputs did feed into charge inflation, as service providers raised their fees.

There was positive news on the employment front as well. “The rate of employment growth softened from November, but was sharp
and among the strongest seen since data collection began in December 2005,” HSBC noted.

The level of positive sentiment declined from November, but remained above the long-run average.

The government will release preliminary figures for GDP on January 7, indicating the hit to growth owing to a slowdown in growth after the release of the second quarter data.

Moreover, the economy grew 6 percent in the first half of the year. It would need to log 7 percent growth in the remaining half to achieve the lower end of 6.5-7 percent growth projected by the government.

A tumultuous geopolitical scenario may also weigh on growth. International orders did slip to a three month low in December, a news platform reported.