Advertising, better customer relations, efficiency gains and healthy demand conditions all underpinned upbeat projections for output in the year ahead. Representational image.
| Photo Credit: The Hindu

India’s services sector activity witnessed a sharp uptick in February boosted by improving domestic and international demand, which resulted in a quicker expansion in output and a substantial increase in employment, a monthly survey said on Wednesday (March 5, 2025).

Private sector output, as measured by the HSBC Composite Purchasing Manager’s Index (PMI), grew to 58.8 in February 2025, led by uptick in services output growth , according to a statement from HSBC. The private sector PMI was 57.7 in the previous month.

A value above 50 implies growth and the composite PMI has stayed in this territory for 43 months now.

Service sector PMI expanded to 59 in February 2025 from 56.5 in the previous month, offsetting the monthly slowdown in manufacturing PMI.

“India’s services business activity index rose to 59.0 in February 2025, up considerably from January’s 26-month low of 56.5. Global demand, which grew at its fastest pace in six months according to the new export business index, played a major role in driving output growth for India’s services sector. Meanwhile, job creation and charge inflation remained strong during February” said India Chief Economist of HSBC Pranjul Bhandari.

Sales and international orders increased in services sector in the reporting month. External sales expanded at the fastest pace in six months. Pressures to meet increasing orders led to higher recruitment drives. Overall rate of input inflation receded to a four month low.

While services sector experienced an expansion i in output Manufacturing PMI had slowed to a fourteen month low of 56.3 in the January 2025.

The HSBC India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies.

On the domestic macroeconomic front, the Indian economy grew by 6.2 per cent in the December quarter, recovering sequentially from seven-quarter lows, but the expansion came in lower than last year.

For the full 2024-25 fiscal (April 2024 to March 2025), the government now pegs GDP growth at 6.5 per cent, marginally higher than its initial estimate of 6.4 per cent but below the revised growth rate of 9.2 per cent for 2023-24.

The growth in the current fiscal and less than 7 per cent expected in the next will keep India as the fastest-expanding major economy.

(With inputs from PTI)