Acceleration in new orders helped activity in India's services sector expand at a faster rate in January than in the previous month. The HSBC Services Purchasing Managers' Index (PMI) rose to 52.4 points from 51.1 in December, marking the third straight month of expansion after seeing stagnation in October.
A reading above 50 signals expansion on the index based on survey of 350 private sector firms.
The revision of official base year of GDP from 2004-05 to 2011-12 saw shrinking in the share of services sector from 57% to 51%. The overall GDP growth for 2013-14 was revised from 4.7% to 6.9%.
Reflecting this, the sub-index for new business rose to 52.1 from 51.8.
Both cost and output inflation in the services sector faced pressure and rose, but the bank's economist expects the Reserve Bank of India to cut interest rates further.
RBI kept repo rate unchanged in Tuesday's policy meet after a 25 basis points cut in January, leaving repo rate at 7.75%.Official data shows that inflation remains well under control, with wholesale inflation rising lower than expected in December at 0.11% while retail inflation, the primary gauge for RBI, stood at 5%.The composite PMI output index of the manufacturing and services sectors rose to 53.3 points in January from 52.9 in the previous month.There was sustained growth of new business in January, extending the current sequence of expansion to nine months that could be attributed to a solid demand in the economy and new marketing initiatives, the report said. The services sector was, however, upbeat about the outlook due to improvement in demand conditions and market initiatives.The composite PMI that combines both services and manufacturing sectors climbed to 53.3 from 52.9 in December.
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