Services activity boosts private sector growth in Feb but manufacturing slows

New Delhi: India’s private sector output increased at the fastest pace in six months during February amid a quicker expansion in services activity, according to an HSBC flash survey released on Friday.

The latest HSBC flash PMI data, compiled by S&P Global, signalled robust growth in overall sales and increasing pressure on operating capacities. Price trends diverged, with cost inflation easing while prices for goods and services rose faster during the period.

The services sector experienced an acceleration, with the HSBC Flash India Services PMI Business Activity Index rising to 61.1 in February from 56.5 in January.

Meanwhile, India’s manufacturing sector slowed, with the HSBC Flash India Manufacturing PMI at 57.1 in February from 57.7 in January. 

The latest reading was nevertheless above its long-run average of 54.1 and consistent with a robust improvement in the health of the sector. The 50-point threshold distinguishes expansion from contraction.

The HSBC Flash India Composite Output Index, which tracks monthly changes in combined output from manufacturing and services, rose to 60.6 in February from 57.7 in January.

“Rapid restocking around the world continues to lift new export orders. A healthy acceleration in orders and output is keeping firms optimistic about the future,” said Pranjul Bhandari, chief India economist at HSBC.

“Input prices eased while output prices rose at a faster pace, leading to improved margins, especially for goods producers,” Bhandari added.

The survey indicated that favourable demand conditions continued to strain operating capacities, as reflected in a further rise in outstanding business volumes.

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$10 trillion economy

India aims to achieve a $10 trillion economy within the next decade, driven by an expanding manufacturing sector. Priority areas include semiconductors, electronics, electric vehicles, renewable energy, and defence.

The central government has significantly increased capital expenditure to support this vision, focusing on infrastructure development, job creation, and manufacturing growth.

“February ‘flash’ data indicated quicker increases in prices charged for both Indian goods and services. Moreover, the overall rate of charge inflation was marked, as the fastest in three months and above its long-run average,” the survey said.

“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,” it added.