India's service sector growth jumped to 57.5 in January - its fastest pace in a year- due to a rapid and steady growth in new export orders, showed the latest HSBC Purchasing Managers’ Index (PMI) data prepared by Markit and released Tuesday.
HSBC's services PMI -- an index of Indian services sector activity -- increased 1.9 points in January compared to 55.6 cloaked in December. The expansion cheers the economy at a time when India's manufacturing sector appears bogged down by weak overseas demand.
The index for the sector, which constitutes nearly 60 percent of the Indian economy, has remained above the 50-point mark since November last year. A figure above 50 indicates growth.
"Service sector activity continued to pick up pace led by a faster inflow of new business," said Leif Eskesen, HSBC's chief economist for India and Southeast Asia, in a release.
The data depicted an increase in new orders, reflecting the growth trend. The new business sub-index rose to 58.3, the highest since August 2011, raising optimism for future business.
“The overall rate of expansion was sharp and the fastest in 11 months. Whereas growth in the manufacturing sector eased, services new orders rose at the fastest pace in 18 months. Payroll numbers in the Indian private sector rose for the eleventh month running in January, amid evidence of increased volumes of incoming new work,” the survey stated.
Speaking on the increased payroll numbers, Eskesen said: “With stepped up hiring, companies broadly managed to contain the rise in backlogs of work.”
The inflationary trends showed a marginal increase, according to the data. The input and output prices increased at the same pace as in the previous month, but lower than a year ago.
“Inflation readings held broadly steady, with fuel, raw material and labor cost pressures still simmering. These numbers underscore the need for the RBI to approach policy easing with caution,” Eskesen added.
The Reserve Bank of India had cut its key interest rates by 25 basis points in its January monetary review meeting after the Wholesale Price Inflation moderated to a three-year low of 7.18 percent in December.
India’s manufacturing sector PMI posted a reading of 53.2 in January, down from 54.7 in December - it’s lowest in three months - as the volume of new export orders eased from the previous month, a survey finding released by the HSBC-Markit last week stated.
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