India's Private Sector Reaches New Heights with Service-Driven Surge

India's private sector output soared to a six-month peak in February, spurred by enhanced services activity. HSBC Flash PMI data revealed robust growth in services and moderated growth in manufacturing. A marked increase in new orders and hiring activity bolstered business confidence, foreseeing sustained momentum in the upcoming months.

India's private sector displayed remarkable growth, achieving a six-month high in February due to a significant expansion in services activity as reported by the HSBC Flash PMI data. The seasonally adjusted composite output index climbed from January's 57.7 to 60.6, its fastest growth since August 2024, remaining above the historical average.

Driving this upswing was the services sector, with its PMI Business Activity Index reaching 61.1 from January's 56.5, the highest in nearly a year. Conversely, the manufacturing PMI slightly declined to 57.1 from 57.7, yet it still signaled robust expansion.

Growth in new orders and output fueled business confidence and hiring, marking a peak in job creation, particularly within the services sector. Chief India Economist Pranjul Bhandari noted that robust restocking worldwide boosted new export orders, with input prices easing and output prices rising, enhancing margins for goods producers.

Notably, export demand saw a seven-month high, with goods producers leading despite some loss of momentum. Divergent pricing trends emerged, as input costs reached a four-month low, while selling prices rose, especially in services. Broad optimism surrounded future output, with sentiment rising to heights not seen since November 2024.