Bangalore: The service sector of India rapidly grew within last 5 months, that is, till December and the HSBC Purchasing Managers Index (PMI) data stated that this growth will increase the number of new businesses. This process took side by side the rise in manufacturing activity last month, which was the highest since June.

Leif Eskesen,  HSBC Chief Economist for India and Asean, said in the HSBD PMI report, “Activity in the services sector picked up pace in December led by faster growth in new businesses, underscoring the resilience of the sector.” The report is made on a poll of 350 companies. It says HSBC’s business activity index rose up to 54.2 for December against 53.2 in November and also because of higher demand from domestic as well as foreign clients, the manufacturing PMI had moved up to 54.2 from 51, on higher demand both from domestic as well as foreign clients.

Eskesen also said, “Posting above the 50-no-change threshold separates growth from contraction. The latest reading points to a rise in activity in the service sector that was stronger than in the previous survey period.” As both services and manufacturing activitivities have increased, the HSBC India composite index  have risen up to 54.7 from November’s 52.3.

From the last 32 months, the service sector business is increasing constantly. More work is getting accumulated in service companies and has increased in December, with a marginal increase in overall employment in the sector and it is the first such increase in five months, says the report. Eskesen said, “Demand remains sufficiently solid to allow companies to increase prices charged at an accelerated pace to pass on still accelerating costs.”

The service providers were sanguine that the PMI would rise in 2012 with the ever deteriorating economic conditions and increased competition being cited as the downside risks to growth. It seems that the repeated rate hikes of Reserve Bank of India (RBI) was hurting the recent PMI growth in recent past. Thus, RBI had to take a pause in its December policy review.