Private sector activity grew at the highest pace in six months in February, according to the HSBC Flash India Composite Output Index data. This growth is driven by quicker expansion in services activity, it said.
The Purchasing Managers' Index (PMI) output rose to 60.6 in February after registering a 14-month low of 57.9 in January. This is a seasonally adjusted index to measure month-on-month change in the combined output of India's manufacturing and service sectors.
Services activity witnessed a growth of 61.1 during February, the highest since March last year, from 56.5 in January but manufacturing dipped further to 57.1 from 57.7. Despite the fall, the manufacturing sector still showed good expansion. This reading is above its long-run average of 54.1. Factory orders rose at a softer pace than in January. The slowdown was attributed to competitive pressures often.
“Rapid restocking around the world continues to lift new export orders. A healthy acceleration in orders and output is keeping firms optimistic about the future. Input prices eased while output prices rose faster, leading to improved margins, especially for goods producers,” said Pranjul Bhandari, chief India economist at HSBC.
Furthermore, the overall rate of job creation climbed to a new series peak since the survey began in 2005 at the composite level. Qualitative data revealed that survey members hired a combination of permanent and temporary workers on full- and part-time bases.
Private Sector Activity Slowed in January
In January, private sector activity eased to a 14-month low of 57.9 from a four-month high of 59.2 in the previous month.
While the manufacturing sector showed resilience, with the PMI rising to a six-month high of 58.0 from 56.4 in December, this was dragged by a decline in the services index. During that month, the services index fell to 56.8—the lowest reading in 26 months—down from 59.3.
