PMI data: India’s services growth recovers in February after slowing in January

New Delhi: India's services sector expanded faster in February after growing at its slowest pace in more than two years during January, a private survey released on Wednesday showed.

The seasonally adjusted HSBC India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59 in February from 56.5 in January, remaining comfortably above the 50-point mark that separates expansion from contraction. The index stood at 59.3 in December, 58.4 in November, 58.5 in October, and 57.7 in September.

According to the survey, new orders placed with Indian services companies rose faster during February, boosted by improving domestic and international demand.

Also read | Caregivers to contributors: Can India unlock female workforce's full potential?

"The uptick in growth underpinned a quicker expansion in output and a substantial increase in employment," the survey said. "Although firms noted that cost burdens rose further, the rate of inflation receded to a four-month low. Meanwhile, the rate of increase in output prices was broadly similar to January and therefore remained above its long-run average," it added.

According to Pranjul Bhandari, chief India economist at HSBC, global demand, which grew at its fastest pace in six months according to the new export business index, played a major role in driving output growth for India’s services sector in February.

"Meanwhile, job creation and charge inflation remained strong during February," Bhandari said. "Looking ahead, business sentiment remains broadly positive, but did slightly slip last month to its lowest level since August 2024," she added.

Slowing growth

India’s services sector—a pillar of its economy—accounts for more than half of the country’s gross domestic product (GDP).

The Indian economy expanded by 8.2% in FY24, buoyed by 7.8% growth in the January-March 2024 quarter and surpassing the Reserve Bank of India’s (RBI’s) 7% projection for the fiscal year.

However, momentum slowed the following year. GDP growth eased to 6.7% in the first quarter of FY25, its slowest pace in five quarters, before further decelerating to 5.4% in the second quarter—the slowest in nearly two years—amid sluggish manufacturing, subdued urban consumption, and lacklustre corporate earnings.

Also read: As Trump tariffs target China and Canada, doors open for India

India’seconomic growthengine saw a revival in the December quarter (Q3FY25), recovering from a low in the September quarter. Yet, the 6.2% GDP growth reported was the slowest since Q4FY23, barring one quarter—the previous one (Q2), when it came in at 5.6% (revised estimate).

India’s finance ministry recently said it expects the economy to grow at 6.4% in FY25, while the RBI estimates 6.6% growth, aided by rural consumption, government investment, and strong services exports.

Manufacturing growth fell in Feb

Meanwhile, India’s manufacturing growth fell in February after rising to a six-month high in January, as sales and output growth retreated to a 14-month low.

The HSBC India Manufacturing Purchasing Managers Index (PMI), compiled by S&P Global, fell to 56.3 in February from 57.7 in January. It was 56.4 in December and 56.5 in November. The February PMI number was based on responses from 400 manufacturers.

Composite output index

The HSBC India Composite Output Index rose from 57.7 to 58.8, indicating a substantial rate of expansion.

"The acceleration in growth was centred in the service economy, as manufacturers registered a slower upturn," the survey said. "Private sector sales rose at a sharp rate that was quicker than in January. February's acceleration reflected a pick-up in growth of new business among services companies," it added.

Also read: Divestments may bring ₹10,000 cr for govt in this financial year