India’s services sector maintained expansion in February, though growth moderated due to rising operational costs and slower improvement in new orders, according to recent purchasing managers index data.

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•  India’s Services Purchasing Managers’ Index recorded 58.1 in February, slightly lower than January’s 58.5, indicating continued expansion though the pace of growth moderated.
• The moderation in growth was mainly linked to slower improvement in new business orders, reflecting softer domestic demand and rising competition among service providers.
•  Despite the slowdown, a PMI reading above 50 continues to signal overall expansion in economic activity across India’s services sector.
•  Export demand remained strong as international sales of services increased significantly, supporting business activity and helping offset slower domestic demand.
•  Companies continued to recruit additional staff in February to handle operational workloads and improve service delivery as demand conditions remained generally positive.
•  Businesses reported a sharp increase in operating expenses driven by rising prices of food, labour, energy and other key input costs.
•  To manage increasing cost pressures, many service providers raised their service charges, leading to faster growth in output prices during the month.
•  Overall private sector performance remained robust as combined manufacturing and services activity recorded strong expansion according to the composite economic index.