Although moderate, the rate of job creation outpaced its long-run trend. Indian services companies indicated mild pressure on their operating capacities, as evidenced by a second successive monthly increase in outstanding business volumes.
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With slower growth in new orders, services sector showed some moderation in February as Purchasing Mangers’ Index (PMI) slipped a tad to 58.1, S&P Global report showed on Wednesday. PMI in January was 58.5 in January.
Pranjul Bhandari, Chief India Economist at HSBC, noted that PMI was largely unchanged. “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. PMI is based on responses from purchasing managers of 400 companies. Index above 50 means expansion and below 50 means contraction.
According to S&P Global, February data highlighted the sharpest increase in operating expenses among Indian services firms in two-and-a-half years, with the rate of inflation edging above its historical average. According to panellists, food (cooking oil, egg, meat and vegetables) was the main source of cost pressures, although there were also mentions of greater outlays on energy, labour and commodities.
Similarly, “prices charged for the provision of services were raised to the greatest extent in six months. Here too the rate of inflation was historically elevated,” the report said. Monitored companies suggested that additional cost burdens had been transferred through to clients. Service providers were confident in their ability to secure new orders and thereby lift business activity over the course of the coming 12 months.
Bhandari said that input and output price inflation accelerated, with firms passing higher expenses — particularly for food and labour — on to customers, yet business confidence climbed to its highest level in a year as companies looked to broaden their market presence. Overall, “the composite PMI rose to 58.9, reflecting the fastest pace of private sector activity growth in three months, buoyed by strong momentum in manufacturing,” she said. It may be noted that manufacturing PMI rose to 4 months high of 56.9.
The report further said that upgraded output forecasts helped drive a quicker increase in payroll numbers. Although moderate, the rate of job creation outpaced its long-run trend. Indian services companies indicated mild pressure on their operating capacities, as evidenced by a second successive monthly increase in outstanding business volumes. “The rate of accumulation was marginal and similar to January,” it said.
Published on March 4, 2026