Services grow fastest in 15 months in Dec: HSBC

Services grow fastest in 15 months in Dec: HSBC

Mumbai: Business activity among Indian services companies expanded at its fastest pace in 15 months in December and helped create more jobs, but the outlook for 2010 is wary, a survey released on Wednesday showed.

The HSBC Markit Business Activity Index, based on a survey of 400 firms, rose to 57.41 in December, its highest since September 2008, after slowing to 55.20 in November.

The index has been above 50, which separates expansion from contraction, for eight months as the economy shakes off the impact of the global slowdown. Before that, it shrank for six months, hitting a trough of 40.3 in February.

“As with the manufacturing output index, the services equivalent showed an encouraging bounce in December, suggesting that the economy is picking up steam and that the strong July-September GDP release was no flash in the pan," said Robert Prior-Wandesforde, senior Asian economist at HSBC.

The rate of growth in Indian manufacturing rose for the first time in three months in December, with activity reaching its highest since May on sharp rises in new work and output, a survey showed.

“Wage increases for government workers, lagged effects of policy stimulus and the recovery in external demand will help offset any spillovers on industry and services from a drop in farm output in the coming months," Prior-Wandesforde said.

However, the business expectations sub-index slowed for a second straight month to 65.56 in December, to its lowest level in 10 months. It stood at 71.58 in November.

“The degree of positive sentiment fell sharply since November, as a greater proportion of companies reported that they expect activity in 12 months’ time to be broadly similar to current levels," HSBC Markit said in the report.