India’s services sector continued its healthy expansion in February, with the Services Purchasing Managers’ Index (PMI) at 58.1, slightly lower than January’s 58.5. Despite a slowdown in new orders growth due to increased competition, the sector remained in growth territory as the financial year end approached.
Output growth in India’s service economy remained stable overall, but the growth rate in new orders decreased to a 13-month low. Companies reported a significant rise in overall demand, attributing it to higher client inquiries and enhanced marketing efforts, although intensified market competition hindered faster expansion.
Pranjul Bhandari, Chief India Economist at HSBC, highlighted that the February PMI reading indicated robust growth in the services sector. While new order growth was impacted by rising competition, there was a noticeable improvement in international sales. Many service providers ramped up hiring to meet operational requirements during the month.
The Composite PMI for the overall private sector, combining manufacturing and services data, climbed to 58.9 in February, marking the fastest growth rate in three months, supported by a strong performance in the manufacturing sector. Finance and insurance emerged as the top-performing segment within services, showing rapid growth in both output and new orders, although the pace of expansion moderated compared to previous months. In contrast, real estate and business services lagged behind in output and new order growth.
