HSBC Flash India PMI: Private Sector Output At Six-Month High Led by Services

Private sector output in India increased at the fastest pace in six months during February, amid a quicker expansion in services activity, according to Flash PMI data published on Friday.

The HSBC Flash India Composite Output Index was at 60.6 in February, up from a final reading of 57.7 in January. It is a seasonally adjusted index that measures the month-on-month change in the combined output of India's manufacturing and service sectors. This increase highlighted the fastest rise in private sector activity since August 2024. The rate of growth was also well above its long-run average. Service providers noted a quicker increase than manufacturers, and one that was the strongest in just under a year.

With the majority of the HSBC Flash India Manufacturing PMI sub-components retreating since January, the index slipped from 57.7 in January to 57.1 in February. The latest reading was nevertheless above its long-run average of 54.1. Factory orders rose, but at a softer pace than in January. The slowdown was often attributed to competitive pressures. On the other hand, service providers welcomed the steepest upturn in new business intakes since August 2024. At the composite level, the rate of growth improved to a six-month high.

In line with the trend for unfinished business, services companies recruited staff at a stronger pace than goods producers. At the composite level, the overall rate of job creation climbed to a new series peak. Qualitative data showed that survey members hired a combination of permanent and temporary workers on full- and part-time bases. In particular, there were several mentions of trainees being taken on.

Reportedly due to rising input, labour and transportation costs, survey participants signalled another increase in overall business expenses. The rate of inflation was moderate by historical standards, however, and retreated to a four-month low. Cost pressures were more intense at services firms than at goods producers, with the former also signalling greater outlays on food. February 'flash' data indicated quicker increases in prices charged for both Indian goods and services. Moreover, the overall rate of charge inflation was marked the fastest in three months and above its long-run average.

Looking ahead, private sector companies were strongly upbeat towards output prospects. The overall level of business sentiment was a tick above that seen in January, to reach its highest mark since November 2024. The improvement in confidence was centred at goods producers.