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The country’s services sector has grown at the fastest pace in the past 12 months driven by an increase in new business orders, the HSBC purchasing managers’ index (PMI) data said today.
The services sector which accounts for nearly 60 per cent of the country’s economic output has seen an increase in new orders.
Private sector employment activity also increased for the eleventh month running, according to the data.
The HSBC services business activity index rose to 57.5 in January, up from 55.6 in December – the fastest rise since January last year.
“Service sector activity continued to pick up pace led by a faster inflow of new business,” HSBC chief economist for India & ASEAN Leif Eskesen said.
Growth in activity has now been sustained for 15 months in the services sector but firms in the sector were less optimistic about the outlook for the sector.
Confidence in the services sector was the lowest registered in three months.
Overall, services firms in India remained hopeful regarding activity levels in the upcoming year, with around 42 per cent of services companies predicting overall activity at their units to increase, while just 3 per cent forecasting a decline.
Input prices at private sector companies in India rose for the 46th successive month during January, though the rate of the price rise was much weaker than a year ago.
“Inflation readings held broadly steady, with fuel, raw material and labour cost pressures still simmering,” Eskesen said adding that “these numbers underscore the need for the RBI to approach policy easing with caution”.
The Reserve Bank of India cut interest rates on January 29 for the first time in nine months, in a move to improve economic growth by easing fund flow to increase consumption and investment demand.