India’s services activity expanded at a robust pace in February, with the HSBC services Purchasing Managers’ Index (PMI) coming in at 60.6 during the month, a release by S&P Global said on Tuesday. The February print was, however, lower than 61.8 recorded during January.
February is a consecutive month, services PMI has crossed the 60-mark. In the current fiscal so far, services PMI has come in above 60 in seven months.
The robust services PMI print comes on the heels of the GDP data, which showed services sector growth expanding at 7% in Q3 as compared to 6% in Q2.
In Q3 FY24, “Trade, hotels, transport, communication & services related to broadcasting’ grew 6.7% and ‘financial, real estate & professional services’ expanded by 7%. Both the sectors grew faster than in the previous quarter.
Despite having slipped, the headline index was comfortably above the neutral mark of 50.0 and signalled a sharp rate of expansion that was well above the series’ history (since December 2005), S&P Global said. “Granular data showed that business activity increased across all parts of the service sector.”
The composite PMI – a weighted average of both manufacturing and services PMI – slipped to 60.6 in February from 61.2 in January. Data released on Friday showed manufacturing PMI in February rose to 56.9 in February from 56.5 in the previous month.
February data highlighted a notable upturn in demand across the service sector, with inflows of new business expanding for the thirty-first month running. That said, like for output, the rate growth softened from January’s recent high whilst remaining well above its long-run average, S&P Global said.
On price pressures, firms reported higher input costs due to increase in food, freight and labour costs. Indian companies operating in the service sector sought to protect their margins by raising prices charged to customers, said S&P Global. “That said, the rate of inflation was slight, below its long-run average and cooled to the weakest in two years.”
Business confidence regarding the year-ahead outlook for activity weakened in February, but around 26% of companies foresee growth and only 2% anticipate a fall, said S&P Global. “Where optimism was signalled, firms cited buoyant client appetite, greater publicity and an improvement in customer relations.”