While India’s manufacturing sector saw a lag, services sector showed better performance in February. HSBC Purchasing Manager Index (PMI) for Service sector shows that the index hit an eight-month high in February.
The index rose to 53.9 in February from 52.4 in January. Combined with manufacturing data, the Composite Output data showed marginal increase and rose to 53.5 from 52.25. Manufacturing seems to have lost its steam marginally in February as PMI dropped to three-month low.
The services sector survey showed that new business received by Indian service providers increased markedly in February, amid evidence of strengthening demand conditions, weaker inflation rates and market stability. The growth rate was the fastest since June 2014. Among the six monitored categories, Financial Intermediation was the only sub-sector to post falling incoming new work. Service providers indicated that output prices increased for the third successive month. At the private sector overall, output prices rose at a modest pace that was well below the series average.
Meanwhile, positive sentiment towards services output growth in the year ahead was sustained in February. Almost 26 per cent of panellists anticipate higher business activity over the course of the next year, which they commonly linked to improved market conditions, low inflation rates, increased marketing and favourable exchange rates. Nonetheless, the level of positive sentiment fell since January, the survey said.
“Boosted by a solid rise in new work, service sector output in India expanded at a robust rate in February that was the strongest since mid-2014. Nonetheless, the latest improvement in economic prospects across the sector is yet to feed through to the labour market, as employment was little-changed over the month,” Pollyanna de Lima, Economist at Markit said. On manufacturing index, de Lima said that manufacturers saw both production and order book volumes increase at slower rates. Nonetheless, private sector output growth picked up pace since last month.