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India’s services sector saw strong new business growth in December 2022, led by financial and insurance services, according to the S&P Global India Services Purchasing Managers’ Index (PMI) which jumped to 58.5 on last month versus 56.4 in November 2022. A reading of 50 on the index indicates no change in business activity levels.
It was the 17th month in a row that new orders rose for services businesses and the rise was the strongest since August 2022, according to the survey-based PMI business activity index, which reflects the pace the highest overall services growth since mid-2022.
With India’s manufacturing PMI also surging in December, the S&P Global India Composite PMI Output for the month rose from 56.7 in November to 59.4 in December, marking the fastest rate of growth since January. 2012, nearly eleven years.
Real estate and business services saw the slowest growth in new orders in December, even as input cost inflation accelerated from November 2022 levels, with businesses citing wage pressures and job losses. higher prices for energy, food and transport.
Consumer services were hardest hit by this surge in input cost inflation, while financial services and insurance companies increased their charges the most for the second month in a row.
The services sector continued to ramp up hiring to keep pace with the recovery in output and activity, but the magnitude of job creation fell to its lowest level in five months. Although overall positive sentiment was above average, businesses were “the least optimistic” in three months, with competitive pressures and inflation fears dampening overall optimism, the company said.
“As we head into 2023, companies reported strong optimism about production prospects. About 31% of panelists forecast growth, while only 2% anticipate contraction,” said Pollyanna De Lima, Associate Director of Economics at S&P Global Market Intelligence.
“Inflation trends have been mixed as input prices have risen at a faster pace and rising charges have moderated. On the expense front, service companies reported cost pressures for energy, food, staff and transportation and several businesses felt the need to pass escalating costs onto customers,” a- she added.
Overall sales rose strongly and at the fastest pace since August, spurred by faster expansions by goods producers and services companies, S&P Global noted of the combined performance of the manufacturing and services sector in December.
“With capacity pressures remaining subdued, private sector job creation slowed to a five-month low. At the composite level, the inflation rate was at a two-month high. month and above its long-term average. Production cost inflation in the private sector also rose, as a stronger increase in manufacturing more than offset a slowdown in service providers,” he pointed out.