India’s business activity saw its fastest growth in three months in November, driven by a strong services sector and record job creation, despite a surge in output inflation to a near 12-year high.

India’s business activity grew at its fastest pace in three months in November, driven by a strong services sector and a slight slowdown in manufacturing.

The HSBC India Composite PMI rose to 59.5 in November, maintaining 40 months of expansion despite the highest retail inflation in 14 months.

Domestic demand improved due to better sales in the services sector, while manufacturing orders grew more slowly. Both sectors saw a rise in overseas markets, with manufacturing exports reaching a four-month high.

Optimism for the coming year increased, with businesses ramping up hiring, especially in the services sector, leading to the fastest job creation since 2005.

Rising inflationary pressures, including higher raw material, food, and wage costs, pushed output inflation to the highest level since February 2013, affecting businesses.

The Reserve Bank of India is concerned about rising core inflation and may keep interest rates unchanged in its December meeting.

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