India’s February service sector PMI moderates to 60.6 from 61.8 in January

The services sector Purchasing Managers' Index (PMI) moderated to 60.6 in February, down from 61.8 in January, according to the seasonally adjusted HSBC India Services Business Activity Index. The moderation in growth comes on the back of softer expansions in business activity, sales and jobs. 

"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. While the business activity eased in February, it remained historically strong. In PMI parlance, a print above 50 means expansion, while anything below it indicates contraction. 

Business from abroad placed with services firms in India rose for the 13th successive months, with participants reporting gains from Australia, Asia, Europe, the Americas and UAE.

Business confidence regarding the year-ahead outlook weakened in February, while 26 per cent of companies foresee a growth, and only 2 per cent see 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," Lam added. Prices charged for services rose at the slowest pace in 24 months, and input prices inflation moderated, said Lam. 

While companies created jobs as workloads increased, 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.