Mumbai: India’s services activity expanded at a 12-year high in February, helped by an improvement in overall demand as well as the easing of input cost pressures to a 29-month low, a private survey showed.

The seasonally adjusted S&P Global India Services Purchasing Managers’ Index (PMI) expanded sharply to 59.4 in February from 57.2 in January.

The reading above 50 indicates an overall expansion in services activities and a sub-50 print shows an overall decline.

“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,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.

Helped by a substantial moderation in cost pressures — input prices increased at the slowest pace in nearly two-and-a-half years — output charge inflation softened to a 12-month low, the survey showed.

“The latest PMI results showed the slowest increases in input prices and selling charges in 29 and 12 months respectively, with rates of inflation below their long-run averages in both cases,” De Lima noted.

The survey, compiled by S&P Global from responses to questionnaires sent to around 400 service sector companies, showed that only four per cent of services companies transferred cost increases to their clients, while the vast majority opted to leave selling prices unchanged.

While consumer services topped the rankings for input costs, the sharpest rise in output charges was seen in transport, information and communication.

The rate of job creation was only marginal as the vast majority of survey participants reported no change in staff levels from January. “It seems that hiring growth was also dampened by a lack of confidence in the business environment,” De Lima said.

The survey said that the overall level of positive sentiments towards the year-ahead outlook for business activity had changed little from January and remained below its long-run average.

Private sector output in the country rose for the nineteenth successive month in February.

During the month, the S&P Global India Manufacturing Purchasing Managers’ Index (PMI) expanded to 55.3 in February from 55.4 in January.

PTI

Press Trust of India