BOOSTER DOSE Composite PMI Output Index rose from 56.3 in Jan to 57.6 in Feb

India’s services activity marked its quickest rise in over seven years, coupled with a renewed increase in new export orders and strengthening business confidence, a private survey showed Wednesday.

The IHS Markit India Services Business Activity Index rose from 55.5 in January to 57.5 in February. This is the fastest expansion in services output since January 2013.

Service providers saw a marked increase in new work intakes during February, the second-fastest in over seven years. Finance and insurance, and consumer services firms were the most confident during February, as per the survey report.

“Growth in India’s services sector accelerated further halfway through the final quarter of fiscal year 2019-20, with the trend for business activity improving in each month since last September when the sharpest contraction for 19 months was recorded,” said Pollyanna de Lima, principal economist at IHS Markit and author of the report.

A return to growth of new orders from abroad contributed to the increase in total sales. The pace of expansion in international demand for Indian services was moderate, but above its long-run average.

BUSINESS RESILIENCE

Further, the Composite PMI Output Index that maps both the manufacturing and services sector increased from 56.3 in January to 57.6 in February, remaining above its long-run average of 54.6.

Lima said behind the resilience in the trend for business activity stands healthy demand for services from both the domestic and international markets. February data showed that robust increases in both manufacturing and services output pushed growth of private sector business activity to an eight-year high.

“Positive gains in new work across the manufacturing and services sectors suggest that private sector output will likely increase markedly again in March, boding well for final quarter GDP following expectations of a flat growth rate in Q3 FY 2019-20,” De Lima said.