Services PMI eases to 60.6, consumer inflation hits 2-year low in Feb

India's services activity continued to expand in February, with the HSBC Purchasing Managers' Index (PMI) for the sector coming in at 60.6, data released on March 5 showed.

At 60.6, the February services PMI is below the flash estimate of 62.0 released on February 22. It is, however, above the key level of 50, which separates expansion in activity from contraction, for the 31st month in a row.

"India's services PMI suggests that the pace of expansion in the services sector eased in February from January. Due to a slowdown in growth in new orders and output, services companies' outlook for future business activity, while remaining strongly positive, weakened slightly," said Ines Lam, an economist at HSBC.

According to S&P Global, which compiles the index, there was a "notable upturn" in demand across the service sector in February, although the rate of increase in demand was lower than in January. External demand, meanwhile, rose for the 13th month in a row and at a pace that was "among the best in the nine-and-a-half-year series history", S&P Global said.

At the same time, while the order backlog of Indian service providers rose in February again, it did so at the weakest rate in three months. This hurt recruitment, with hiring growth joint-slowest in 21 months.

"Survey members mostly indicated that workforce numbers were sufficient for current requirements," S&P Global said.

Like the services index, the composite PMI also eased to 60.6 in February from 61.2 in January, with data released on March 1 showing that the manufacturing PMI last month was at a five-month high of 56.9.

Even as the services and composite activity indices edged lower in February, there was better news on the inflation front, with the increase in prices charged by services firms being the least in two years.

This was on the back of firms' operating expenses rising in February at the second-weakest rate in three-and-a-half years.

"Higher food, freight and labour costs pushed up input prices, according to anecdotal evidence," S&P Global said.