NEW DELHI: As per a monthly poll released on March 3, the Indian services industry grew at its fastest rate in 12 years in February, helped by favourable demand conditions and new business gains.
Its highest level in 12 years, the seasonally adjusted S&P Global India Services PMI Business Activity Index increased from 57.2 in January to 59.4 in February.
The headline figure was above the neutral 50 level for the 19th consecutive month. A score above 50 on the Purchasing Managers' Index (PMI) indicates expansion, while a number below 50 indicates recession.
Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, stated that the service sector more than recovered the growth momentum lost in January, posting the sharpest expansion in output in 12 years as demand resilience and competitive pricing policies supported the joint-best upturn in sales over the same period.
In terms of prices, cost pressures were significantly moderated as output charge inflation weakened to a 12-month low and input costs rose at their slowest rate in nearly two and a half years.
The number of new orders placed with service providers increased in February, and numerous businesses indicated that aggressive pricing benefited sales, according to the poll. Nonetheless, it continued, there were still only modest increases in jobs and minor capacity pressures.
"Service providers noted only mild pressure on their capacities despite the strong uptick in new business intakes, and as a result, a large percentage of firms left payroll numbers unchanged," Ms. Lima said, adding that hiring growth was also slowed by a lack of confidence in the business environment.
While some businesses questioned whether demand would continue to be as strong, the level of optimism recorded in February was the lowest in seven months and below the historical norm. Others expressed worry about the tight competition for available jobs.
The S&P Global India Composite PMI Output Index, which tracks both manufacturing and service production, increased from 57.5 in January to 59 in February, signalling a rapid and robust rate of growth.
"Moreover, services companies had a quicker increase in new business than their manufacturing counterparts. Sales increased at the composite level at the joint-fastest rate in 11 years "the poll found.
S&P Global compiles the India Services PMI based on responses to questionnaires distributed to a panel of about 400 service-related businesses. Based on contributions to GDP, the panel is segmented by detailed sector and corporate employee size. Data collection began in December 2005.
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