India’s services sector saw faster expansion in February, rebounding from its slowest growth in over two years in January, according to a private survey released on Wednesday.
The HSBC India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59 in February from 56.5 in January, indicating a solid expansion as it remained well above the 50-point mark separating growth from contraction. This was a slight dip from December’s 59.3 but still marked a steady growth trend following 58.4 in November, 58.5 in October, and 57.7 in September.
The survey highlighted that new orders for services in India grew at a faster pace in February, driven by both domestic and international demand. This led to a quicker expansion in output and a substantial rise in employment. Although companies reported higher cost pressures, the inflation rate eased to a four-month low. The rate of increase in output prices remained above its long-run average, staying consistent with January’s figures.
Pranjul Bhandari, HSBC’s chief India economist, attributed the faster output growth to strong global demand, which saw its highest pace in six months according to the new export business index. She also noted that job creation and inflation in charges remained robust, although business sentiment slightly dipped, hitting its lowest level since August 2024.
India’s services sector, a key contributor to the nation’s economy, accounts for over half of the country’s GDP. Despite a growth slowdown in the manufacturing and overall economy during the first half of FY25, services have shown resilience, with the government projecting a 6.4% growth rate for FY25.
In contrast, manufacturing growth slowed in February after reaching a six-month high in January. The HSBC India Manufacturing PMI dropped to 56.3 from 57.7 in January. However, the overall composite output index, which combines services and manufacturing, rose to 58.8, signaling substantial growth primarily driven by services.
As a result, while India faces some economic headwinds, particularly in manufacturing, the services sector continues to play a crucial role in maintaining growth momentum.
