India's Feb biz growth hits 6-month high, driven by services: Flash PMI

Services sector's index climbed to 61.1 in February, its highest level since March of the previous year, compared to 56.5 in January

India’s private sector experienced its fastest growth in six months during February, driven by a surge in services activity, according to HSBC's flash India Composite Purchasing Managers' Index (PMI). The survey, compiled by S&P Global, further indicated that job creation reached a record high, marking a significant development for Asia’s third-largest economy.

 

Composite PMI output rose to 60.6 in February, up from 57.7 in January. The PMI, where a reading above 50 signifies expansion, showed substantial improvement, primarily driven by the services sector.

 

The services sector's index rose to 61.1 in February, the highest since March of the previous year. This marks an increase from 56.5 in January. This strong performance counterbalanced a slight decline in the manufacturing PMI, which dipped to 57.1 from 57.7. Despite the fall, the manufacturing sector still showed healthy expansion.

 

 

The robust business expansion is a positive sign for India’s economy, which faces global uncertainties such as potential tariffs from United States President Donald Trump that could ignite a broader trade war.

 

A significant factor behind the services sector’s growth was a surge in new business orders, which reached a six-month high. While new manufacturing orders also increased, the pace of growth was slower than in January. International demand followed a similar pattern across both sectors.

 

Commenting on the findings, Chief India Economist at HSBC Pranjul Bhandari said, “Rapid restocking around the world continues to lift new export orders. A healthy acceleration in orders and output is keeping firms optimistic about the future. Input prices eased while output prices rose at a faster pace, leading to improved margins, especially for goods producers.”

 

Employment generation surged, reaching its fastest pace since the survey began in late 2005. Businesses took advantage of increased demand by raising prices, even as input cost pressures moderated. Notably, for the first time since October, the sub-index measuring output charges surpassed that of input prices, with cost pressures being more pronounced in the services sector than in manufacturing.

 

Business confidence for the year ahead also improved in February, rising from January levels and reaching its highest point since November.