There was tremendous growth in India’s service sector last December. S&P Global said this in the results of a survey on Monday. The services sector performed impressively in December, reaching a four-month high. The survey result, known as the Purchasing Managers’ Index (PMI), increased to 59.3 in December from 58.4 in November. However, the survey report points out that growth in the service sector will shrink due to manufacturing. Its PMI fell to a 12-month low of 54.1 in December. HSBC India Services Purchasing Managers’ Index (PMI) was 58.4 in November, 58.5 in October and 57.7 in September.
meaning of pmi index
According to the news, PMI is based on a survey among purchasing managers of 400 companies. An index above 50 indicates expansion, while an index below 50 indicates contraction. HSBC economist Ines Lam said India’s service sector companies expressed strong optimism in December. As a result, PMI reached its peak in four months. The survey said cost burdens increased modestly in December, although higher spending on food, labor and materials was reported, as selling price inflation also declined during the month.
Contribution of service sector in GDP
Service sector is the basis of India’s economy. It contributes more than half to the country’s gross domestic product or GDP. India’s economy grew 8.2% in fiscal 2023-24, boosted by a 7.8% expansion in the January-March 2024 quarter, surpassing the Reserve Bank of India’s projected 7% growth rate for that fiscal year. GDP growth slowed to 6.7% in the first quarter of 2024-25, the slowest pace in five quarters. India’s economic growth slowed further to 5.4% in the second quarter of FY2025, the slowest in nearly two years.
There was an increase in business expenses
Service sector companies saw their business expenses rise in December, but the inflation rate moderated from a 15-month high in November. Anecdotal evidence shows that companies overpaid for food, labor and materials, Hindu Business Line reported. Reflecting further increases in input costs, companies raised their own charges again in December.
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