India’s private sector output witnessed the fastest increase in six months during February, driven by a quicker expansion in services activity with the HSBC Flash India Composite Output Index rising to 60.6 during the month, up from 57.7 in January. The rate of growth was also well above its long-run average. Service providers noted a quicker increase than manufacturers, and one that was the strongest since August 2024.
Pranjul Bhandari, Chief India Economist at HSBC, said, “Rapid restocking around the world continues to lift new export orders. A healthy acceleration in orders and output is keeping firms optimistic about the future. Input prices eased while output prices rose at a faster pace, leading to improved margins, especially for goods producers.”
The latest HSBC Flash data also indicated stronger growth of aggregate sales, which exerted upward pressure on operating capacities and prompted companies to step up hiring.
With the majority of the HSBC Flash India Manufacturing PMI sub-components retreating since January, the index slipped from 57.7 in January to 57.1 in February. The latest reading was nevertheless above its long-run average of 54.1 and consistent with a robust improvement in the health of the sector, the survey added. While the factory orders rose sharply, it was at a softer pace than in January.
On the other hand, service providers welcomed the steepest upturn in new business intakes since August 2024. At the composite level, the rate of growth improved to a six-month high.
Furthermore, India’s private sector continued to witness improved international demand for their goods and services. Collectively, new export orders rose at the fastest rate in seven months, with panellists reporting gains from across the globe.
With overall demand conditions remaining favourable, operating capacities faced further pressures which was evident from an increase in outstanding business volumes. Since this accelerated to the strongest in over four years, the rate of backlog accumulation was solid. This was more pronounced at services firms than at their manufacturing counterparts
On account of this backlog accumulation, services companies recruited staff at a stronger pace than goods producers. At the composite level, the overall rate of job creation climbed to a new series peak. Qualitative data showed that survey members hired a combination of permanent and temporary workers on full- and part-time bases. Subsequently, due to rising input, labour and transportation costs, survey participants signalled another increase in overall business expenses.
February ‘flash’ data indicated quicker increases in prices charged for both Indian goods and services. Moreover, the overall rate of charge inflation was marked, the fastest in three months and above its long-run average.
Looking ahead, the report maintained, private sector companies were strongly upbeat towards output prospects. The overall level of business sentiment was a tick above that seen in January, to reach its highest mark since November 2024.