November services PMI surges as business booms

November services PMI surges as business booms

Bangalore: Business activity in India’s services sector surged to a four-month high in November, driven by robust growth in new orders, a survey showed on Friday.

The HSBC Markit Business Activity Index, based on a survey of 400 firms, rose to 60.1 in November from 56.2 in October.

It was the best showing for the index since July, and the 19th straight month it has remained above the 50 mark that divides growth from contraction.

New business climbed to a three-month high, while other sub-indexes climbed from October.

“This was a strong showing for the Indian service sector, with activity picking up nicely in November and businesses more optimistic about the future," Leif Eskesen, chief economist for India and Asean at HSBC, said in a statement.

India’s manufacturing sector expanded at its fastest pace in six months in November on a surge in new business and a sharp rise in export orders, an earlier survey showed.

Official data this week showed India’s $1.3-trillion economy expanded at a faster-than-expected 8.9% annual pace in the September quarter. The services sector, which accounts for more than 50% of GDP, grew 9.8%.

The HSBC Markit output price index rose to 52.8 in November from 49.4 in October -- the first time it had been sub-50 since last November -- reflecting a strong rise in input costs and the ability of firms to pass these on.

Input prices, which have been increasing since April 2009, continued to climb on the back of rising staff costs last month.

“Prices are going north, highlighting the need for a resumption of monetary policy tightening in early 2011," Eskesen said.

That is likely to increase pressure on the central bank to continue raising interest rates, though traders do not expect the next hike until early next year.

Backlogs of work, or outstanding business, declined marginally for the third month in a row due to higher productivity.