The HSBC Purchasing Managers' Index (PMI) for the services sector came in at 60.6 in February, according to data that was released on March 5th. This indicates that India's services activity continued to rise during February.
In February, the services PMI was measured at 60.6, which is lower than the flash estimate of 62.0 that was announced on February 22. However, for the thirty-first consecutive month, it has remained above the critical threshold of fifty, which serves as a barrier between expansion and contraction in activity.
The PMI for services was at 61.8 in January.
All of India's services It appears that the rate of expansion in the services sector slowed down in February compared to January, according to the PMI. According to Ines Lam, an economist at HSBC, the forecast for future business activity among service organizations has softened significantly, even though it is still quite optimistic. This occurred as a result of a slowdown in the growth of new orders and output.
There was a “notable upturn” in demand throughout the service sector in February, according to S&P Global, which is the company that calculates the index. However, the rate of increase in demand was lower than it was in January. S&P Global said that the external demand increased for the thirteenth consecutive month and at a rate that was “among the best in the nine-and-a-half-year series history.” This was the case for the external demand.
At the same time, the order backlog of Indian service providers increased once more in February, but it did so at the slowest rate in the past three months. It was the weakest hiring growth in 21 months as a result of this, which hindered recruitment.
“Survey members mostly indicated that workforce numbers were sufficient for current requirements,” S&P Global reported yesterday.
In the same way that the services index decreased to 61.2 in January, the composite PMI also decreased to 60.6 in February. The data that was provided on March 1 showed that the manufacturing PMI reached a five-month high of 56.9 in manufacturing during the previous month.
Even though the composite activity index and the services index both continued their downward trend in February, there was positive news about inflation. The increase in prices charged by service providers was the lowest it has been in the past two years.
This came about as a result of the fact that the operational expenses of businesses increased in February at the second-lowest rate in the past three and a half years.
“Higher food, freight, and labor costs pushed up input prices, according to anecdotal evidence,” S&P Global reported yesterday.
The decrease in inflation that consumers are experiencing for services will contribute to the conviction that policymakers have that their focus on prices is having the effect that they want it to have. The Consumer Price Index (CPI) inflation rate dropped to a three-month low of 5.10 percent in January, according to data that was issued on February 12th. Core inflation reached a level that was over four years lower than it had been before, at 3.6 percent. February's Consumer Price Index (CPI) inflation figures will be made public on March 12th.
For the sixth meeting in a row, the Monetary Policy Committee of the Reserve Bank of India decided to maintain the repo rate at 6.5 percent. This decision was made on February 8. Economists are increasingly of the opinion that India's faster-than-expected growth rates give the Indian central bank more time to allow inflation, particularly food inflation, to cool down on a sustainable basis. This is even though inflation is finally seen easing to the medium-term target of 4 percent in July-September before rising again to 4.6-4.7 percent in subsequent quarters.