HSBC Indian services PMI up to 57.5 in January

Service sector activity in India expanded at the fastest pace in a year last month, driven by rising foreign orders, however, businesses were a little less upbeat about the future, according to a survey.

The HSBC Markit services Purchasing Managers' Index, which is an indicator of business activity based on a survey of companies ranging from banks to hospitals, was up to 57.5 in January from 55.6.

The services PMI has been above 50, the level dividing expansion from contraction, for over a year, even though India appeared set to end the 2012-13 fiscal year with its slowest economic growth rate in a decade.

Services constitute around 60 per cent of Asia's third-largest economy, with some of India's top services exports being software, back-office support and banking services.

"Service sector activity continued to pick up pace led by a faster inflow of new business," said Leif Eskesen, HSBC's chief economist for India and Southeast Asia, in a release.

The new business sub-index was up to 58.3, the highest since August 2011, prompting firms to increase the hiring pace, though at a rather subdued rate.

Although companies remained optimistic about the future, the business expectations index was down slightly from December.