The seasonally adjusted S&P Global India Services PMI Business Activity Index rose to 59.4 in February from 57.2 in January.
“The service sector more than regained the growth momentum lost in January, posting the sharpest expansion in output for 12 years as demand resilience and competitive pricing policies underpinned the joint best upturn in sales over the same period,” Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said on Friday.
For the 19th straight month, the headline figure was above the neutral 50 threshold. A print above 50 denotes expansion.
Consumer services outperformed the other three sub-sectors—transport, information, communication, finance, insurance, real estate and business services—registering the fastest increase in new orders.
The degree of optimism recorded in February was the lowest for seven months and below the historical trend as some companies doubted demand would remain this resilient. Others displayed concerns surrounding fierce competition for new work.
Firms indicated that competitive prices boosted sales. Additionally, moderation of input price inflation helped provide a fillip to the service activity.
The rate of input price inflation moderated to a 29-month low, according to the report.
Only 4% of the 400 service sector companies surveyed by S&P Global transferred cost increases to clients, leading to selling charge inflation falling to a 12-month low. “The reduced services price pressures will likely provide some comfort to policymakers, but the pass-through to hard data will be key. The manufacturing PMI also showed both output and input prices decelerating, with a dip lower in pricing power for goods,” said Rahul Bajoria, MD & head of EM Asia (ex-China) economics, Barclays.
Despite service activity scaling to a 12-year high, job numbers remain unchanged, as firms reported only mild pressure on capacity.
“It seems hiring growth was also dampened by a lack of confidence in the business environment,” De Lima said, highlighting that the year-ahead outlook was lowest in seven months and below the long-run average.
Services grew stronger than manufacturing, and the PMI composite index showed a sharp rise in private sector output to 59 in February from 57.5 in the previous month.