India's services growth steady in Feb but demand cools, inflation pressures rise: PMI

Growth in India’s dominant services sector remained strong in February but demand softened to a 13-month low, while cost pressures and selling prices increased, a monthly survey showed on Tuesday.

The HSBC India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, stood at 58.1 in February, little changed from 58.5 in January.

The figure indicated another month of robust expansion as the index remained well above the 50-mark separating growth from contraction.

However, new business growth slowed to its weakest pace since January 2025, even as overseas demand strengthened and companies stepped up hiring.

“India’s Services PMI registered 58.1 in February, largely unchanged from January’s 58.5, signalling another month of robust expansion in the sector,” said Pranjul Bhandari, chief India economist at HSBC.

“While new order growth slowed to a 13-month low amid rising competition, service providers saw a notable pick-up in international sales and responded with increased hiring to meet operational needs,” she said.

The survey showed international sales grew at the fastest pace since last August, with firms reporting demand from markets including Canada, Germany, China, Singapore, the United Arab Emirates, the United Kingdom and the United States.

Despite the softer pace of new orders, business confidence climbed to its highest level in a year as companies expanded marketing efforts and sought to widen their presence in new markets.

Input costs rose at the fastest pace in two-and-a-half years, driven largely by higher food prices such as cooking oil, eggs, meat and vegetables, alongside rising expenses for energy, labour and commodities.

Companies passed on some of these costs to customers, with prices charged for services rising at the fastest pace in six months.

Among sectors, finance and insurance led growth in both output and new orders, while real estate and business services recorded the slowest expansion.