India’s services sector maintained its expansionary trend in February, registering a Purchasing Managers’ Index (PMI) of 60.6, according to data released on March 5. While the figure is slightly below the flash estimate of 62.0 released on February 22, it remains comfortably above the crucial 50-point threshold, indicating expansion for the 31st consecutive month.
The services PMI stood at 61.8 in January, suggesting a mild easing in the pace of expansion. Ines Lam, an economist at HSBC, noted that the moderation was attributed to a slowdown in growth in new orders and output, affecting services companies’ outlook for future business activity. However, the outlook remains positive, and the overall expansion trend continues.
S&P Global, the compiler of the index, reported a “notable upturn” in demand across the service sector in February, though the rate of increase was lower than in January. External demand saw continuous growth for the 13th consecutive month, maintaining a robust pace described as “among the best in the nine-and-a-half-year series history.”
Despite the overall positive picture, the order backlog of Indian service providers increased in February at the slowest rate in three months, leading to a slowdown in hiring growth, which was the joint-slowest in 21 months. Survey respondents indicated that current workforce numbers were sufficient for their requirements.
The composite PMI, encompassing both services and manufacturing, also eased to 60.6 in February from 61.2 in January. Meanwhile, data released on March 1 revealed that the manufacturing PMI reached a five-month high of 56.9 in the same period.
On the positive side, there was favorable news on the inflation front. Services firms reported the least increase in prices charged in two years, attributed to a rise in operating expenses at the second-weakest rate in three-and-a-half years. Anecdotal evidence suggests that higher food, freight, and labor costs contributed to the uptick in input prices.
