The services sector in India continued its growth trajectory in December, with the country's Purchasing Managers' Index reaching 59.3, up from 58.4 in the previous month, an economy tracker showed. 

According to the HSBC Final India Services PMI report, compiled by S&P Global, the growth of new businesses and output reached four-month high in December. 

Services Sector Strengthens in India

The analysis added that demand buoyancy continued to drive higher new business inflows, which in turn supported output growth and prompted firms to recruit additional workers. 

S&P Global further pointed out that participants who took part in the PMI survey were also strongly upbeat regarding the year-ahead outlook for business activity. 

"India's services companies expressed strong optimism in December as business activity growth surged to a four-month high," said Ines Lam, economist at HSBC. 

He added: "Forward-looking indicators such as new business and future activity suggested that the strong performance will likely continue in the near future." 

According to S&P Global, any PMI reading above 50 signifies growth, while reading below 50 indicates contraction of the activities in the services sector. 

The report added that there was a softer increase in cost burdens, though panellists continued to report greater outlays on food, labour and materials. 

Additionally, selling price inflation also eased in December. 

"The easing of input price inflation in the month also supported business sentiment. Strength in the services PMI stands in contrast with the growing signs of a slowdown in the manufacturing industry," said Lam. 

Private Sector Outlook

According to the report, private sector companies in India posted a faster increase in output at the end of the calendar year.

This acceleration was driven by service providers who recorded a quicker increase in business activity when factory production growth softened. 

The analysis revealed that the HSBC India Composite Output Index reached 59.2 in December compared to 58.6 in November, also marking the strongest rise in four months. 

"Although job creation remained stronger in the service sector than in the manufacturing industry, the latter saw a pick-up in growth and the former a slowdown. At the composite level, employment expanded at a softer pace that was nevertheless among the strongest on record," said the report. 

The survey report added that input cost inflation across the private sector economy eased during December, while the month also witnessed a slower increase in prices charged for goods and services.