With rise new export orders and strengthening business confidence, the Indian services sector growth jumped to over 7-year high in the month of February 2020. As per the survey report, the IHS Markit India Services Business Activity Index increased for the fifth successive month in February to 57.5 from 55.5 in January after dipping to a 19-month low in September 2019. The latest figure highlighted the quickest expansion in services output since January 2013.
Service providers reported increase in new work intakes during February. The report noted that the rise in new orders was widespread across the five monitored categories and led by Consumer Services. A return to growth of new orders from abroad contributed to the increase in total sales. Projects in the pipeline, supportive market conditions, marketing efforts and the offering of new services all contributed to a stronger degree of optimism among firms that output will increase in the year ahead.
Despite experiencing another increase in outstanding work halfway through the final quarter of fiscal year 2019/2020, service providers restricted hiring activity in February. The rate of job creation was modest and the slowest in three months. Besides, input prices in the service economy increased amid reports of higher food, labour, material and oil costs. Only a modest increase in selling prices was recorded in February, one that was softer than in January and much weaker than noted for input costs.
February data also showed that robust increases in both manufacturing and services output pushed growth of private sector business activity to an eight-year high. The Composite PMI Output Index was up to 57.6 in February from 56.3 in January, remaining above its long-run average of 54.6. Composite indices are weighted averages of comparable manufacturing and services indices. The report noted robust increases among goods producers and service providers, with the sharper rate of expansion among the former.
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