The HSBC Services PMI rose to 53.9 in February up from 52.4 in January, indicating strong expansion in output across the sector, besides new order flows. The latest numbers come on a day when the Reserve Bank of India (RBI), in a surprise move, cut interest rates by 25 bps. However, commentary associated with the survey report had expected the RBI to be cautious on the rate cut front.
According to Pollyanna De Lima, Economist at Markit, “Boosted by a solid rise in new work, the service sector output in India expanded at a robust rate in February that was the strongest since mid-2014,” said.
Respondents cited robust growth of new business as the principle factor for the increase in activity. Four of the six broad areas in the services sector recorded rising output, the exception being Financial Intermediation and Transport & Storage.
Since manufacturing PMI had declined to 51.2 points in February from 52.9 points in the previous month, the composite PMI rose marginally to 53.5 points from 53.3 over the period.
But job creation remains a concern. The survey notes shortages of skilled workers, with services employment remained broadly unchanged from past levels.
Signalling pricing power, output prices rose for the third straight month, though the rate of change was lower than observed in January.
Input cost inflation moderated in February, in line with the moderation in overall inflation in the economy, with the increase way below the average of the series. Higher food and wage costs were partially offset by the sharp decline in fuel prices.
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