India's Service Sector Maintains Strong Growth Momentum

India's services activity continued to expand strongly at the start of the year, underpinned by robust inflow of new orders, results of the purchasing managers' survey by S&P Global showed on Friday.

The services Purchasing Managers' Index dropped to 57.2 in January from 58.5 in December. However, a score below 50 indicates expansion in the sector.

New orders continued to increase sharply at the start of the year, but the rate of growth has eased since December.

The overall growth in new orders was more evident in the domestic market, as international orders decreased.

Outstanding business volumes increased for the thirteenth month in a row in January, and at the fastest rate since last August.

?The overall rate of job creation at service providers was fractional in May. The mention of adequate capacities for current requirements at other firms hampered hiring growth.

In terms of prices, input price inflation eased to a two-year low in January. Similarly, output prices grew at the slowest pace since March 2022.

Looking ahead, marketing initiatives, expanded capacity, and predictions that demand will remain strong in the coming year fueled optimism about growth prospects.

Nonetheless, overall optimism fell to a six-month low as the vast majority of respondents forecast no change in activity from current levels.

The composite output index also declined to 57.5 in January from December's near 11-year high of 59.4. This signaled that the Indian private sector continued to perform well at the start of the year, with manufacturing production increasing at a stronger rate than service activity.

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