The HSBC India Services Business Activity Index posted 55.6 in December, up from 52.1 in the previous month signalling a sharp expansion in activity, the fastest in three months.
The HSBC India Composite Output Index posted 56.3 in December, up from 53.2 in November. The rate of expansion was sharp, and the fastest since February. Manufacturers and service providers both signalled increases in output, with rates of growth quickening in both sectors.
With manufacturing and services companies both registering sharp growth, the overall rate of expansion was steep and the fastest in ten months. Among other factors, monitored companies mentioned that new business increased in tandem with stronger demand.
Indian manufacturers and service providers both signalled rising staffing levels during December, amid reports of output growth. However, rates of expansion were only slight. Employment in the private sector rose at the slowest rate in the current 10-month sequence of job creation.
Optimism was signalled by service providers in India during December. Approximately 46% of monitored companies expect overall activity to increase in the upcoming year, and they mentioned anticipated rises in demand, the launch of new projects and increased advertising.
Leif Eskesen, chief economist for India & ASEAN at HSBC said, ''The service sector provided some holiday cheer with activity fully recovering after two months of deceleration, led by a sharp rise in new business. The additional workload also led to a rise in outstanding business. Inflation readings, meanwhile, eased a bit. With growth showing signs of recovery and inflation still elevated, the case for a policy rate cut is not yet convincing. However, the RBI has clearly teed up for rate cuts in January-March.''