Indian Service Sector Growth Weakest In Over 2 Years

(RTTNews) - The growth in the Indian service sector activity eased at the start of the year to the lowest level in more than two years amid a softer increase in new orders, final data from S&P Global showed on Wednesday.

The HSBC final services Purchasing Managers' Index dropped to 56.5 in January, the lowest level since November 2022, from 59.3 in the previous month. However, a reading above 50 indicates expansion in the sector. The flash score was 56.8.

New orders grew at the slowest pace in fourteen months due to intense competition, while the overall growth was driven by strong demand and decisions to offer better prices than rivals.

Export demand showed a quicker increase in January, thanks to noted gains from clients in Asia, Europe, the Middle East, and the Americas.

Growing capacity pressures and continuous improvements in new business intakes led service providers to hire additional workers, with the rate of job creation accelerating from December.

On the price front, price pressures remained elevated in January, linked to rising staff costs and higher food prices. As a result, selling price inflation accelerated further.

Indian service providers remained confident about business activity expectations over the year ahead on the back of fruitful advertising, efforts to price competitively, and new client inquiries.

The composite output index declined to a 14-month low of 57.7 in January from 59.2 in December, indicating that India's private sector economy lost some growth momentum in January, as a quicker increase in factory production was more than offset by a softer expansion in services activity.