Growth in India’s dominant services sector remained strong in November despite the steep rise in prices, a business survey showed. The HSBC final India Services Purchasing Managers’ Index (PMI) stayed almost unchanged at 58.4 in November from 58.5 in October. A sub-index measuring new business, a gauge of demand, fell but showed no concerning signs of weakness, driven by international demand that rose at its fastest pace since August.
The future activity sub-index was the highest in six months, indicating a significant improvement in business outlook for the year ahead. This is supported by predictions of strong demand. The survey also reported a record hiring pace in the services sector, with the greatest number of new employees hired since the survey’s inception in December 2005.
The hiring surge is attributed to the sector’s improving business confidence, growing new orders, and vigorous international demand. This growth is likely to boost slowing consumption in the economy, a main drag on GDP data last quarter.
However, inflation in the services sector rose at its quickest pace in 15 months, triggered by labor and materials expenses. As a result, companies increased prices charged to clients at the fastest rate in nearly 12 years.
The manufacturing PMI cooled to 56.5 in November, dragging the overall Composite PMI to 58.6, down from 59.1 in October. Despite the slight decrease in services activity, the dominant services sector continues to experience strong growth.