India's Services PMI Stable in Feb; Business Confidence Hits 1-Year High

India's service sector output remained stable in February (PMI at 58.1), buoyed by strong demand and exports. While new orders slowed, business confidence reached a one-year high. The composite PMI hit a 3-month peak, driven by manufacturing.

Services Sector Performance

Output growth across India's service economy was broadly stable heading towards the end of the current fiscal year, despite new orders rising at the slowest pace since January 2025, according to the HSBC India Services PMI report. Business confidence is reported to be at its highest level in a year. Elsewhere, companies signalled faster increases in input costs and output charges.

Registering 58.1 in February, the seasonally adjusted HSBC India Services PMI Business Activity Index - based on a single question asking how the level of business activity compares with the situation the month before - was broadly similar to January's reading of 58.5 and therefore indicated another sharp expansion in output. Business activity growth was underpinned by efficiency gains, favourable underlying demand, rising sales and tech projects.

One area of outperformance was exports, as services firms reported gains from many parts of the world including Canada, Germany, mainland China, Singapore, the UAE, the UK and the US. On average, international sales expanded at the fastest pace since last August.

Economist's Take

Pranjul Bhandari, Chief India Economist at HSBC, said, "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. 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."

Composite PMI and Overall Growth

"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," Pranjul Bhandari said.

Aggregate business activity across India rose at the fastest pace in three months during February, buoyed by a substantial improvement in demand and an associated upturn in new business intakes. While quicker expansions in sales and output were evidenced in the manufacturing industry, there were slowdowns at services firms, as per the HSBC India Composite PMI.

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