India's Services PMI Indicates Strongest Growth In 12 Years

The Indian service sector moved one step forward in February, with output expanding at the strongest rate in 12 years amid the joint-best improvement in new business intakes over the same period. Still, capacity pressures remained mild and jobs rose only marginally. Helped by a substantial moderation in cost pressures input prices increased at the slowest pace in nearly two-and-a-half years output charge inflation softened to a 12-month low.

At 59.4 in February (January: 57.2), the seasonally adjusted S&P Global India Services PMI Business Activity Index was at its highest level in 12 years and indicated a sharp expansion in output. Where growth was reported, survey participants mentioned favourable demand conditions and new business gains.

New orders placed with service providers rose further in February, with several firms suggesting that competitive pricing boosted sales. Although Indian service providers signalled a further increase in their expenses midway through the final fiscal quarter, the rate of input price inflation moderated to a 29-month low. February data highlighted slower increases in input costs and selling prices across the four broad areas of the service economy. Employment increased further in February, stretching the current sequence of expansion to nine months. the overall level of positive sentiment towards the year-ahead outlook for business activity was little changed from January and remained below its long-run average.

Private sector output in India increased for the nineteenth successive month in February. Rising from 57.5 in January to 59.0, the S&P Global India Composite PMI Output Index highlighted a sharp and stronger rate of expansion. Growth was stronger in services than in manufacturing. Services firms also recorded a faster upturn in new business than their manufacturing counterparts. Trends for input prices were mixed in February, with a stronger increase among goods producers contrasting with a slowdown in the service economy. Finally, private sector jobs rose only marginally in February, with rates of expansion broadly similar at manufacturers and service providers.

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