Key Points
Services activity index rises to 59 in February
Global orders expand fastest in six months
Job creation reaches peak levels since 2005
The quicker pace of growth also led to job creation rising at one of the fastest rates since 2005.
"In order to accommodate for rising new businesses and alleviate capacity pressures, Indian services firms continued to pursue recruitment drives. Employment expanded sharply, and at one of the fastest rates seen since data collection began in December 2005," the survey states.
"Global demand, which grew at its fastest pace in six months according to the new export business index, played a major role in driving output growth for India's services sector," said Pranjul Bhandari, chief India economist, HSBC.
Gains in international orders supported this trend, with service providers reporting better demand from clients in Africa, Asia, Europe, the Americas and the Middle East. Overall, external sales expanded at the fastest pace in six months, the survey noted.
While strong demand indicated pricing power for service sector firms as well, with firms being able to pass on costs, consumer services was most afflicted by rising prices.
"Out of the four broad areas of the service economy tracked by the PMI survey, cost pressures were most intense in the Consumer Services category. The strongest increase in selling charges was signalled by Transport, Information & Communication firms," the survey said.
The survey is in line with the official GDP data released last week, which showed that the services sector performance led the rebound in economic activity in the third quarter, with growth recovering to 6.2 per cent after slowing to 5.6 per cent in the second quarter.
The HSBC India Composite Output Index also rose from 57.7 to 58.8 in the same duration, indicating a substantial rate of expansion.
"Job creation and charge inflation remained strong during February. Looking ahead, business sentiment remains broadly positive," Bhandari added.
Advertising, better customer relations, efficiency gains and healthy demand conditions all underpinned upbeat projections for output in the year ahead. Around one-quarter of survey members forecast growth in the year ahead, while fewer than 2 per cent were pessimistic.
