MUMBAI: Private sector output grew at the fastest pace in four months helping the economy end 2024 on a positive note boosted by strong demand from services and manufacturing sectors leading to record jobs creation.
According to a private survey, the flash PMI rose to 60.7 in December, which matches the reading in August after dropping to 58.6 in November.
The good new is a releif for the economy which had slumped to a seven-quarter low of 5.4 percent in the Sepetember quarter. Also the falling inflation is expected to spur demand among private sector companies.
According to the December flash composite purchasing managers' index (PMI), compiled by S&P Global for British lender HSBC, rose to 60.7 in December, after dropping to 58.6 last month. A reading over 50 separates growth from contraction. The index has been above 60 in all but three months of this year, something not seen since 2008 when the global financial crisis hit.
"The small rise in the headline manufacturing PMI in December is mainly driven by gains in current production, new orders and employment," said Ines Lam, an economist at HSBC.
"The expansion in new domestic orders quickened, suggesting a pick-up in growth momentum."
A stronger rise in demand was mainly reflected in the PMI for the dominant services sector which constitutes close to 60 percent of the GDP and rose to a four-month high of 60.8 from 58.4 in November, while the index for manufacturing was 57.4, up from 56.5 last month.
Services providers led the rise in sales with the new business sub-index touching the highest since January. Improving international demand for goods and services also boosted sales with the former recording a faster increase than the latter.
The final month reading has improved the business outlook for 2025 and overall optimism rising to its highest since September 2023 and prompting companies to ramp up hiring at the fastest pace since the survey began in late 2005. This had both manufacturing as well as services posting a new peak for employment generation.
Another reason was the easing inflationary pressures in December, which after two consecutive months of steeper rise, fell to 5.41 per cent. However, companies again increased prices albeit at a slower pace than November's near 12-year high.