India's Service Sector Activity
India's service sector experienced significant growth in February 2025, according to HSBC's Flash India Composite Purchasing Managers’ Index (PMI).
Purchasing Managers’ Index (PMI) Overview
- The PMI for February rose to 60.6, up from 57.7 in January 2025.
- This increase marks the fastest growth in six months.
- A PMI value above 50 indicates expansion in the sector.
Sector-Specific PMI Data
- Services PMI: Increased to 61.1 in February from 56.5 in January.
- Manufacturing PMI: Slightly decreased to 57.1 in February from 57.7 in January, though it remains above the long-run average of 54.1.
Key Factors and Insights
- Global restocking is boosting new export orders.
- Both orders and output are accelerating, maintaining optimism among firms.
- Input prices have eased, but output prices increased, improving margins for goods producers.
Employment and Export Trends
- Aggregate sales growth is increasing the need for hiring, with the services sector hiring at a faster pace than the goods sector.
- Export orders are growing more rapidly for service providers compared to manufacturers.
Economic Indicators and Expectations
- Of the 100 indicators surveyed, 65% showed an upward trend in Q3 FY 2025, up from 55% in the September quarter.
- Inflation is anticipated to ease, possibly prompting the RBI to reduce rates by 25 basis points in the April Monetary Policy Committee meeting.
