India's Services Sector Thrives Amid Rising Costs: HSBC-S&P Global PMI Report Highlights Strong Demand And Record Hiring

Despite the sharpest increase in prices in over ten years, India's prevailing services sector continued to exhibit robust growth in November.

A business survey revealed that steady demand resulted in a substantial boost in business sentiment and unprecedented recruitment, reported Economic Times.

The final India Services Purchasing Managers' Index from HSBC, compiled by S&P Global, remained at 58.4 in November, slightly down from 58.5 in October.

However, this was lower than an initial estimate of 59.2.

The sub-index that measures new business, which serves as an indicator of demand, showed a decline from October, but did not exhibit any worrisome signs of fragility.

This was backed by the international demand that increased at the quickest rate since August.

However, a significant increase was observed in the business forecast for the upcoming year due to expectations of robust demand.

The sub-index for future activity reached its peak in half a year.

"The hiring surge reflected the sector's improving business confidence, growing new orders, and vigorous international demand," noted Pranjul Bhandari, chief India economist at HSBC.

Increased job opportunities could stimulate the sluggish economy by improving consumption, which was one of the primary factors affecting the GDP data in the previous quarter.

The expansion of the world's fifth-largest economy slowed down to 5.4 per cent in the quarter of July to September, from 6.7 per cent in the period of April to June.

Despite expectations that the Reserve Bank of India would not ease policy until the beginning of the next year, inflation in October exceeded the bank's target range of 2-6 per cent, according to a Reuters poll conducted last week.

There was a noticeable increase in inflation within the PMI. The speed at which the cost prices escalated was the fastest in 15 months, this was due to the expenses associated with labour and materials.

Companies transferred the additional expense load to their customers, resulting in the most rapid increase in pricing seen in almost 12 years.

The Manufacturing PMI, which was released on Monday, dropped slightly to 56.5 last month, contributing to a minor decrease in services activity and causing the Composite PMI to fall to 58.6 from 59.1 in November.