India's services PMI loses some momentum, eases to 57.2 in January

The services PMI data comes a couple of days after the manufacturing PMI declined to a three-month low of 55.4 in January

India's services sector expanded again in January, although the sector's Purchasing Managers' Index (PMI) fell to 57.2 from 58.5 in December, according to data released by S&P Global on February 3.

At 57.2, the services PMI is above the key level of 50 that separates expansion in activity from a contraction for the eighteenth month in a row.

The services PMI data comes a couple of days after the manufacturing PMI declined to a three-month low of 55.4 in January from December's 26-month high of 57.8.

As a result, the composite PMI - which is a combination of the manufacturing and services indices - declined to 57.5 from 59.4 in December.

"...the survey showed us that service providers received high amounts of new business which helped keep the overall rate of growth historically prominent. Demand resilience in turn meant that output also continued to expand at a generally strong pace," said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.

The latest data pointed to strong demand emanating from the domestic markets for services companies vis-à-vis international orders.

"Underlying data suggested that the rise in total new business was centred  on the domestic market, as international orders decreased. The fall was only marginal, but compared with the strongest upturn for almost three-and-a-half years in December."

The report stated that there was a mild increase both in the input costs and prices charged. Several firms chose to absorb the input cost pressure rather than transfer it to clients in a bid to boost sales.

"The latest rise was the slowest since March 2022 and below the average seen since the survey started in December 2005. Some panel members indicated that demand strength enabled the transfer of cost increases to clients, but several firms opted to absorb additional cost burdens instead of hiking their fees amid attempts to boost sales."