India’s private sector output reached a six-month high in February, driven by a sharp expansion in services activity, according to the latest HSBC Flash PMI data.
The seasonally adjusted HSBC Flash India Composite Output Index rose to 60.6 from 57.7 in January, marking its strongest growth since August 2024 and remaining above its long-term average.
The services sector was the key contributor to this growth, with the HSBC Flash India Services PMI Business Activity Index climbing to 61.1 from 56.5 in January, its highest level in nearly a year. Meanwhile, the manufacturing sector’s growth slowed slightly, with the HSBC Flash India Manufacturing PMI easing to 57.1 from 57.7 in January, though it still indicated robust expansion.
A rise in new orders and output boosted business confidence, leading to an increase in hiring activity. The report noted that job creation reached a record high, with firms hiring both permanent and temporary workers. The services sector, in particular, experienced the sharpest rise in new business since August 2024.
Pranjul Bhandari, Chief India Economist at HSBC, said, “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 at a faster pace, leading to improved margins, especially for goods producers.”
Export demand also strengthened, with new international orders rising at the fastest pace in seven months. Goods producers led this growth, although their momentum slowed compared to January.
The HSBC Flash PMI data showed contrasting price trends. Input cost inflation eased to a four-month low, while selling prices increased at a faster rate, particularly in the services sector. The rate of charge inflation in February was the highest in three months, as businesses were able to pass on costs to consumers.
Rising labor and transportation costs continued to put pressure on input prices, though inflationary pressures remained moderate compared to historical levels. Services firms reported higher expenses on food and wages, adding to their cost burdens.
Private sector firms remained optimistic about future output, with business sentiment reaching its highest level since November 2024. This confidence was especially strong in the manufacturing sector, where companies continued to stockpile raw materials to support production growth.
– ANI