New Delhi [India], March 3 (ANI): Indian service providers expanded business activity at the fastest rate in a year during February due to a quicker increase in new orders, according to the latest IHS Markit Services Purchasing Managers' Index (PMI) released on Wednesday.
Moreover, the rollout of coronavirus disease 2019 (Covid-19) vaccines led to an improvement in business confidence towards growth prospects. Worryingly, however, employment declined for the third month in a row and companies noted the sharpest rise in overall expenses for eight years.
Rising from 52.8 in January to 55.3 in February, the seasonally adjusted India Services Business Activity Index pointed to the sharpest rate of expansion in output in one year. Moreover, the latest reading extended the current growth sequence to five months.
Survey participants linked the upturn to improved demand and more favourable market conditions. New work intakes expanded for the fifth straight month and at the fastest pace over this sequence.
According to monitored companies, marketing efforts and increases in new clients led to sales growth. Panellists continued to indicate that the Covid-19 pandemic and travel restrictions curbed international demand for their services.
New export orders declined for the 12th month running albeit at the weakest rate since last March. Despite ongoing growth of total new business, service sector employment fell further during February.
A number of companies suggested that the Covid-19 pandemic restricted labour supply. The pace of job shedding accelerated from January but was moderate overall.
"The February PMI data showed a solid growth performance for Indian service sector which alongside a robust upturn in manufacturing production pushed up the Composite Output PMI to a four-month high," said Pollyanna De Lima, Economics Associate Director at IHS Markit.
"With capacity pressures mounting, business sentiment strengthening and the vaccination programme widening, it seems that the best days are ahead of us regarding employment growth," she said.
The IHS Markit India Services PMI is compiled from responses to questionnaires sent to a panel of around 400 service sector companies. The sectors covered include consumer (excluding retail), transport, information, communication, finance, insurance, real estate and business services.
The panel is stratified by detailed sector and company workforce size based on contributions to GDP.
IHS Markit is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government. (ANI)