India's services sector growth eases in February on softer expansions in business activity, sales

The seasonally adjusted HSBC India Services Business Activity Index registered 60.6 in February, down from 61.8 in January.

New business from abroad placed with services firms in India rose for the thirteenth successive month. Filephoto | Photo Credit: The Hindu

The services sector growth in India moderated in February amid softer expansions in business activity, sales and jobs, a monthly survey said on Tuesday, March 5, 2024.

The seasonally adjusted HSBC India Services Business Activity Index registered 60.6 in February, down from 61.8 in January.

In Purchasing Managers' Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

"India's services PMI suggests that the pace of expansion in the services sector eased in February from January," said Ines Lam, Economist at HSBC.

According to the survey, the business activity index eased in February, but remained historically strong.

New business from abroad placed with services firms in India rose for the thirteenth successive month. Survey participants reported gains from Australia, Asia, Europe, the Americas and UAE.

Business confidence regarding the year-ahead outlook for activity weakened in February. Still, around 26 per cent of companies foresee a growth and only 2 per cent anticipate a fall.

"Due to a slowdown in growth in new orders and output, services companies' outlook for future business activity, while remaining strongly positive, weakened slightly," Ms. Lam added.

Ms. Lam further noted that prices charged for services rose at the slowest rate in 24 months as input prices inflation moderated.

On the employment front, companies created jobs on the back of rising workloads, but the easing of capacity pressures and lower confidence towards the outlook dampened employment growth.

Meanwhile, the HSBC India Composite PMI Output Index slipped from a six-month high of 61.2 in January to 60.6, indicating a softer but sharp rate of expansion.

Composite PMI indices are weighted averages of comparable manufacturing and services PMI indices.

Growth of private sector sales likewise remained sharp in spite of softening since January, the survey said.

Rates of expansion were broadly similar at manufacturers and services firms, though the former registered an acceleration and the latter a slowdown, it added.