February 2020: India's services PMI grows

Marking its quickest rise in over seven years, India's services sector activity expanded for the fifth successive month in February, tracking spike in business orders, renewed export demand and strengthening business confidence.

The IHS Markit India Services Business Activity Index rose from 55.5 in January to 57.5 in February. This is the fastest expansion in services output since January 2013.

Service providers saw a marked increase in new work intakes during February, the second-fastest in over seven years.

A return to growth of new orders from abroad contributed to the increase in total sales. The pace of expansion in international demand for Indian services was moderate, but above its long-run average.

Further, the Composite PMI Output Index that maps both the manufacturing and services sector increased from 56.3 in January to 57.6 in February, remaining above its long-run average of 54.6.

February data showed that robust increases in both manufacturing and services output pushed growth of private sector business activity to an eight-year high.

Meanwhile, the rate of job creation was modest and the slowest in three months.

Despite experiencing another increase in outstanding work halfway through the final quarter of fiscal year 2019-2020, service providers restricted hiring activity in February.

Further, input costs in the service economy increased amid reports of higher food, labour, material and oil costs.

As per the survey, the rate of inflation softened from January. Anecdotal evidence suggested that lower prices for onions, and fuel helped curtail inflation.

Only a modest increase in selling prices was recorded in February, one that was softer than in January and much weaker than noted for input costs.

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