New Delhi, March 4 (Mayank Nigam) India’s services Purchasing Managers’ Index (PMI) rose from 51.5 in January to 51.8 in February on the back of greater bookings, better demand conditions and the retreat of the pandemic, a private survey showed on Friday. The uptick in the index was, however, subdued by historical standards, with some survey participants indicating that growth was dampened by competitive pressures, Covid-19 and higher prices. “Rising from 51.5 in January to 51.8 in February, the seasonally adjusted India Services Business Activity Index pointed to a moderate rate of expansion that was marginally quicker than in January,” said the IHS Markit survey.
The survey said that the service sector moved up a gear in February as Covid cases declined and restrictions were lifted following the escalation of the pandemic and an associated slowdown in growth in January. As per the survey findings, there was an uptick in business confidence in February but firms continued to shed jobs. Input costs increased at a softer rate as did output prices during this period. “Growth in the service sector failed to rebound as meaningfully as many would have hoped given that Covid-19 cases receded considerably from January’s new wave and restrictions were lifted,” said Pollyanna De Lima, Economics Associate Director at IHS Markit. De Lima further said that new business and services activity expanded only modestly, and at the second-slowest rates since last July. “Looking at the anecdotal evidence supplied by survey participants, inflationary pressures, input shortages and the local elections dampened growth,” said the economist.
The survey showed that growth of private sector output recovered some of the ground lost in January due to the escalation of the pandemic. “The Composite PMI Output Index rose from 53.0 to 53.5 in February, signalling a solid rate of expansion that was nonetheless below its long-run average. Manufacturing firms recorded a notably stronger increase in business activity than their services counterparts, although rates of expansion quickened in both cases,” IHS Markit said. Similarly, new orders increased at quicker rates among services companies and goods producers, with the latter seeing the sharper rise. At the composite level, the rate of expansion remained below trend, despite improving from January’s six month low. “Private sector employment continued to decline halfway through the last quarter of fiscal year 2021/22, albeit at a modest rate. Job shedding was evident in both the manufacturing and services economies,” said the survey.