Business sentiment for the services sector as measured by the HSBC Purchasing Managers' Index (PMI), adjusted for seasonal factors, rose to a eight-month high of at 53.9 in February on the back of new business growth.
PMI, compiled monthly by global bank HSBC, measures economic health of a sector based on surveys of private sector companies. A reading of above 50 on the index denotes expansion.
According to the report, activity rose in four of the six broad areas of the service economy, the exceptions being financial intermediation and transport & storage. Factors like strengthening demand conditions, weaker inflation rates and market stability led to a rise in the new business in services for February.
Over a quarter of respondents anticipate higher business activity over the course of the next year, which they commonly link to improved market conditions, low inflation rates, increased marketing and favourable exchange rates, as per the report, which added, “Nonetheless, the level of positive sentiment fell since January."
The composite services PMI index marginally rose to 53.5 marking an expansion for the tenth straight month. This is in contrast to the manufacturing sector PMI for the country, which moderated for February.
"Boosted by a solid rise in new work, service sector output in India expanded at a robust rate in February that was the strongest since mid-2014. Nonetheless, the latest improvement in economic prospects across the sector is yet to feed through to the labour market, as employment was little-changed over the month," said Pollyanna De Lima, economist at Markit.
(Edited by Joby Puthuparampil Johnson)