India's Service Sector PMI Slows To 60.6 In February

The HSBC India Services Business Activity Index, adjusted for seasonal variations, recorded a figure of 60.6 in February, marking a decrease from 61.8 in the previous month

February saw the second-weakest cost pressures in the services sector since August 2020.

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India's service sector sustained its growth trajectory through February, buoyed by robust demand trends, albeit at a slower pace compared to January. According to the latest data from the HSBC Purchasing Managers' Index (PMI), released on Monday, the sector's expansion remained historically significant despite a slight deceleration.

The HSBC India Services Business Activity Index, adjusted for seasonal variations, recorded a figure of 60.6 in February, marking a decrease from 61.8 in the previous month. Despite this moderation, the index comfortably maintained its position above the neutral mark of 50.0, indicating a substantial expansion for the sector. This growth rate surpasses the series history dating back to December 2005.

The report highlighted that February saw the second-weakest cost pressures in the services sector since August 2020. Additionally, there was a notable softening in the increase of selling charges, marking the most moderate rise in two years.

While the growth rate may have moderated compared to January, analysts remain optimistic about the resilience of India's services sector, especially considering the challenging global economic environment. The continued expansion of the service industry is expected to contribute positively to India's overall economic performance in the coming months.

"India's services PMI suggests that the pace of expansion in the services sector eased in February from January," said Ines Lam, Economist at HSBC.

According to the survey, the business activity index eased in February, but remained historically strong. New business from abroad placed with services firms in India rose for the thirteenth successive month. Survey participants reported gains from Australia, Asia, Europe, the Americas and UAE.

On the employment front, companies created jobs on the back of rising workloads, but the easing of capacity pressures and lower confidence towards the outlook dampened employment growth.

Meanwhile, the HSBC India Composite PMI Output Index slipped from a six-month high of 61.2 in January to 60.6, indicating a softer but sharp rate of expansion.

Composite PMI indices are weighted averages of comparable manufacturing and services PMI indices. Growth of private sector sales likewise remained sharp in spite of softening since January, the survey said.