MUMBAI: The purchasing managers’ index (PMI) for the services sector in December 2024 rose to 59.3, up from 58.4 in November, signalling a robust growth in the sector on the back of continued demand buoyancy propelling new business inflows, higher output growth, encouraging companies to expand their workforce. This is a sharp contrast to the weakest reading for the year in the manufacturing sector at 56.4.
As per the HSBC services PMI, released on Monday, the services MPI rose to 59.3 in December marking the strongest expansion in the past four months. Underlying demand has been identified as the main driver of growth, with new orders climbing for the 41st consecutive month. Companies attributed this to efforts in expanding capacities, which in turn enabled them to handle more work.
The finance and insurance sectors led growth in the sector with the highest growth in new orders and business activity.
As per Ines Lam of HSBC, services companies expressed strong optimism in December as business activity surged to a four-month high. Forward-looking indicators like new business and future activity suggest the strong performance will likely continue in near term. Easing of input price inflation in the month supported sentiment. Strength in the services PMI stands in contrast with the growing signs of a slowdown in the manufacturing industry.”
December saw a softer rise in input prices, despite continued reports of increased spending on food, labour, and materials. Selling price inflation also eased, though it remained above its long-run trend, Lam said.
“Though companies in the services space continued to see their business expenses rising in the month, rate of inflation softened from November’s 15-month high,” Lam said, adding consumer-focused services firms faced the highest cost pressure, while inflation was most pronounced in the transport, information, and communication categories. The rate of input cost inflation across the private sector economy softened, leading to a slower rise in prices for goods and services. But firms faced increased backlog volumes, reaching a seven-month high, indicating sustained pressure on capacities.
It can be noted that manufacturing PMI in December slipped to a 12-month low at 56.4 primarily due to softer expansion rates in production and fresh business orders. A PMI reading above 50 indicates expansion, while a figure below 50 signifies contraction.