India’s dominant services sector closed 2024 on a robust note, with the Purchasing Managers’ Index (PMI) reaching a four-month high of 59.3 in December, driven by sustained demand buoyancy. According to a private survey released on Monday, the strong demand spurred new business inflows, supported output growth, and prompted firms to hire additional workers.
Compiled by S&P Global and released by HSBC, the PMI figure rose from 58.4 in November. Notably, the index has remained above the neutral 50-mark—signifying expansion—for an impressive 41 consecutive months.
Services PMI performance in 2024
Throughout 2024, the services PMI demonstrated consistent strength:
| Month | PMI Value |
|---|---|
| January | 61.8 |
| February | 60.6 |
| March | 61.2 |
| April | 60.8 |
| May | 60.2 |
| June | 60.5 |
| July | 60.3 |
| August | 60.9 |
| September | 57.7 |
| October | 58.5 |
| November | 58.4 |
| December | 59.3 |
The survey highlighted strong optimism among respondents regarding the business outlook for the year ahead.
Input costs and price inflation
On the cost front, input price inflation eased in December, providing some relief to businesses. However, panellists continued to report higher outlays on essential items such as food, labour, and materials. Selling price inflation also moderated during the month.
Sectoral highlights
The finance and insurance sector emerged as a standout performer, recording the strongest increases in both new orders and business activity among all segments surveyed.
Ines Lam, an economist at HSBC, commented on the findings, stating:
“India’s services companies expressed strong optimism in December as business activity growth surged to a four-month high. Forward-looking indicators, such as new business and future activity expectations, suggest that this momentum is likely to continue in the near term.”
Lam also noted that the easing of input price inflation bolstered business sentiment. She added:
“Strength in the services PMI contrasts with growing signs of a slowdown in the manufacturing industry.”
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Employment trends
The survey also highlighted a continuation of job creation across the service economy, fuelled by new business growth, positive forecasts, and rising capacity pressures.
Although the rate of employment growth softened slightly from November, it remained sharp and was among the strongest observed since the survey began in December 2005.
Outlook for 2025
With strong demand, easing cost pressures, and robust optimism among service providers, India’s services sector appears poised for continued growth in 2025. However, the divergence between the thriving services sector and the slowing manufacturing industry raises questions about the broader economic balance.
As demand buoyancy sustains momentum, the services sector remains a vital driver of India’s economic growth, reflecting resilience amid challenges and signalling a promising outlook for the year ahead.
