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India’s economic activity gained pace in December, as demand for goods and services continued to improve, driven by new orders, a flash survey by HSBC Holdings Plc showed.
The services purchasing managers’ index rose to 60.8 from 58.4 in November, while the manufacturing purchasing managers’ index improved to 57.4 in December from 56.5 in the previous month. That boosted the composite index to 60.7 this month, the highest reading since August this year.
The indexes show business confidence in the economy and are based on preliminary surveys. The data could get revised when final PMI figures are released next month. A reading above 50 indicates expansion in economic activity, while a print below that indicates contraction.
The rise in the manufacturing PMI was “mainly driven by gains in current production, new orders and employment,” Ines Lam, economist at HSBC, said in a statement Monday. “The expansion in new domestic orders quickened, suggesting a pick-up in growth momentum in the economy,” she said.
Falling wages and weak corporate profits dragged India’s expansion to the slowest pace in almost two years in the July to September period. High frequency indicators, though, have shown some rebound since October, aided by strong festive demand and a pick-up in rural activity.
The Reserve Bank of India has kept interest rates unchanged for almost two years now, but analysts expect the new central bank chief, Sanjay Malhotra, to begin easing starting next year.
Business optimism among private sector companies strengthened in December for the second month in a row, HSBC said. With new business remaining on an upward trend, private sector firms in India continued to expand operating capacities by recruiting extra staff, it added.
--With assistance from Saket Sundria.
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