India’s Services Activity Expands at Fastest Pace in a Year

(Bloomberg) -- Activity in India's dominant services sector expanded at its quickest pace in a year in February, helped by an increase in new orders and optimism generated by a roll-out of vaccines to fight the pandemic, a survey showed Wednesday.

The IHS Markit Services Purchasing Managers' Index (PMI) rose to 55.3 last month from 52.8 in January, with a reading above 50 signaling expansion. The services sector makes up more than 50% of India's gross domestic product and the latest print bodes well for growth prospects for the economy in the final quarter of the fiscal year ending March 31.

A similar survey earlier this week showed activity in the manufacturing sector also expanded, helping lift the IHS Markit India Composite Index to a four-month high of 57.3 in February. Rates of input price inflation quickened among goods producers and service providers, pushing the aggregate rate of cost inflation to an 88-month high. Meanwhile, selling prices across the private sector rose only marginally.

“Economic activity is generally expected to recover in the final quarter of the fiscal year,” said Pollyanna De Lima, the economics associate director at IHS Markit. “The latest improvement in the PMI indicators points to a strong expansion in the fourth quarter should growth momentum be sustained in March.”

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