India’s services sector continued its expansion, though the HSBC India Services Purchasing Managers’ Index (PMI) on Tuesday (March 5) put the figure at 60.6 for February — slightly less than the estimate of 61.2 for January.
The data pointed to a "notable upturn" in demand across the service sector for the 31st month due to the expansion of new businesses entering the industry.
If the index is well above 50, it denotes expansion, while an index figure below 50 denotes contraction.
Ines Lam, economist at HSBC, said, “India’s services PMI suggests that the pace of expansion in the services sector eased in February from January. Due to a slowdown in growth in new orders and output, services companies’ outlook for future business activity, while remaining strongly positive, weakened slightly.”
According to S&P Global, business activity increased across all parts of the service sector, with finance and insurance witnessing the strongest pace of growth. Real estate and business services saw the slowest rise among the sector.
Even as operating expenses increased slightly, Indian companies raised the prices charged to customers to protect their margins. Moreover, the rate of inflation was modest, under its long-run average and dropped to its lowest in the last two years.
Even though the increase in outstanding business volumes was small in February, it expanded for the 26th consecutive month, showcasing the sustained pressure on the capacity of service providers.
The service sector companies saw subdued recruitment due to a slow rise in backlogs in February. Meanwhile, international sales grew at the best rate in the last nine-and-a-half years.
The HSBC India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies. The sectors covered include consumer (excluding retail), transport, information, communication, finance, insurance, real estate and business services.
