India’s Services Sector Surges in February as New Orders and Jobs Rise: HSBC

India’s services sector made a big comeback in February, with the HSBC India Services Purchasing Managers’ Index (PMI) increasing to 59.0 from 56.5 in January, its lowest level in more than two years. The most recent information, collected by S&P Global, showed an increase in new business orders, both foreign and local, leading to increased output and a significant increase in employment.

The growth in the services sector was driven by growing demand, mainly from overseas markets, which had its fastest growth in six months, based on the new export business index. Consequently, companies continued to increase operations, resulting in one of the steepest rises in employment since the records started in December 2005. Companies reported taking on full- and part-time employees to meet increasing workloads and alleviate capacity strains.

Speaking about the growth in the service sector, HSBC’s chief India economist Pranjul Bhandari stated, “Job creation and charge inflation were strong in February. Forward-looking indicators remain positive overall, but did ease last month to its lowest level since August 2024.”

Even as the overall strength of the services sector was maintained, cost pressures were a matter of worry, the survey added. Firms reported increased costs due to more hiring, pay raises, and higher overtime payments, while overall inflation in input costs dipped to a four-month low.

Indian manufacturers lost new orders and weakened production momentum with February’s PMI falling to a 14-month low of 56.3, data indicated on Monday. The manufacturing PMI for last month was 57.7. Expansion in the services sector, however, lifted the overall Composite PMI for February to 58.8, from 57.7 last month.

The Purchasing Managers’ Index provides information on the performance of manufacturing and services industries, enabling investors to gauge business conditions and understand significant context regarding the economic situation in various markets. A value above 50 indicates sector growth, below 50 indicates contraction, and 50 indicates no change.

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