Services Activity Dips In February: What The Latest PMI Data Signals For India

The latest Purchasing Managers’ Index (PMI) data shows that services activity eased to 58.1 in February, down from 58.5 in January, marking a two‑month low. 

Manufacturing activity strengthened during the month, suggesting that industrial production may be gaining traction even as services growth stabilises after a strong run in 2025.

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India’s services sector recorded a modest slowdown in February, even as manufacturing activity gathered pace, highlighting the evolving balance between two of the country’s most important growth engines.

The latest Purchasing Managers’ Index (PMI) data shows that services activity eased to 58.1 in February, down from 58.5 in January, marking a two‑month low. 

While the decline indicates a slight cooling in momentum, the reading remains comfortably above the 50 mark that separates expansion from contraction, signalling that the sector continues to grow.

At the same time, manufacturing activity strengthened during the month, suggesting that industrial production may be gaining traction even as services growth stabilises after a strong run in 2025, reported Moneycontrol.

What The Services PMI Reveals

The Purchasing Managers’ Index is widely regarded as one of the most closely watched indicators of economic activity. Compiled from surveys of business executives, the index captures changes in output, new orders, employment and other operational trends across sectors.

A reading above 50 indicates expansion in business activity, while a figure below 50 points to contraction.

India’s services PMI has remained firmly in expansion territory over the past year, reflecting strong demand across segments such as trade, transportation and financial services. The February reading, therefore, does not signal weakness in the sector but rather a marginal moderation from earlier highs.

Despite the small decline, the index continues to indicate robust activity levels across India’s services economy, which remains a major contributor to employment and output.

A Gradual Moderation Since The 2025 Peak

The February print extends a gradual cooling trend that has been visible since the middle of 2025.

Service activity had surged strongly during that period. The PMI reached 60.7 in June and remained elevated at 60.5 in July, reflecting strong expansion in the sector. Momentum strengthened further in August, when the index climbed to a cycle high of 62.9.

Following that peak, the index began easing gradually in the subsequent months. By the end of the year, the PMI had moderated to 58.0 in December.

The start of 2026 saw a slight recovery, with the index rising to 58.5 in January before edging down again to 58.1 in February.

While the moderation suggests that the pace of growth has cooled compared with the highs of mid‑2025, the services sector continues to expand at a solid rate.

Manufacturing Activity Moves In The Opposite Direction

While service activity softened marginally, manufacturing showed signs of renewed strength during February.

The manufacturing PMI climbed to 56.9, marking a four‑month high and pointing to stronger production momentum in the industrial sector.

The improvement in manufacturing activity indicates that industrial demand may be strengthening, even as services growth stabilises.

The contrasting trends between the two sectors illustrate how different parts of the economy can move at varying speeds, even when overall growth remains strong.

Together, the data suggests that India’s economic expansion continues to be supported by both services and manufacturing, albeit with shifting momentum between the two.

Official Data Paints A Stronger Growth Picture

While PMI readings provide valuable monthly insights into business conditions, official national accounts data offer a broader picture of economic performance.

The latest official figures indicate that both services and manufacturing continued to expand strongly in the October–December quarter.

Services output grew 9.5 per cent during the quarter, up from 9.3 per cent in the previous quarter, indicating sustained demand across key segments such as trade, transport and financial services.

Manufacturing also delivered robust growth. The sector expanded **13.3 per cent in the third quarter**, slightly higher than the **13.2 per cent growth recorded during the July–September period**.

These figures reinforce the role of both sectors as major contributors to India’s overall economic momentum.

The Broader Economic Context

At the aggregate level, India’s economy expanded 7.8 per cent in the third quarter, easing slightly from 8.4 per cent in the previous quarter.

The government expects the economy to grow around 7.6 per cent for the full fiscal year, suggesting that growth in the final quarter is likely to broadly follow recent trends.

The combination of steady services expansion and improving manufacturing activity continues to support India’s growth outlook, even as individual indicators fluctuate from month to month.

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