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'India's service sector activity at 12-year high in Feb'

However, capacity pressures remained mild and jobs rose only marginally, S&P Global India said.

Indias service sector activity at 12-year high in Feb
Representative image

NEW DELHI: The Indian service sector output expanded at the strongest rate in 12 years amid the joint-best improvement in new business intakes over the same period, according to S&P Global India Services Purchasing Managers' Index (PMI).

However, capacity pressures remained mild and jobs rose only marginally, S&P Global India said.

Helped by a substantial moderation in cost pressures -- input prices increased at the slowest pace in nearly two-and-a-half years -- output charge inflation softened to a 12-month low.

At 59.4 in February, the seasonally adjusted S&P Global India Services PMI Business Activity Index was at its highest level in 12 years and indicated a sharp expansion in output. It was 57.2 in January.

Where growth was reported, survey participants mentioned favourable demand conditions and new business gains.

The S&P Global India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies. New orders placed with service providers rose further in February, with several firms suggesting that competitive pricing boosted sales.

The latest upturn in sales was the nineteenth in consecutive months and the joint-strongest in 12 years.

The report said consumer services was the best-performing area in February, registering the fastest increases in new orders and business activity of the four monitored sub-sectors.

Although Indian service providers signalled a further increase in their expenses midway through the final fiscal quarter, the rate of input price inflation moderated to a 29-month low, according to the report. Companies commonly cited higher food, material, transportation and wage costs.

Only 4 per cent of services companies transferred cost increases to their clients, while the vast majority opted to leave selling prices unchanged.

Subsequently, the overall rate of charge inflation eased to a 12-month low.

February data highlighted slower increases in input costs and selling prices across the four broad areas of the service economy, the report said, adding, "while Consumer Services topped the rankings for input costs, the sharpest rise in output charges was seen in Transport, Information and Communication."

Employment increased further in February, stretching the current sequence of expansion to nine months.

That said, the rate of job creation was only marginal as the vast majority of survey participants reported no change in staff levels from January, according to the S and P report.

Among them, there were mentions that capacities were broadly adequate for current requirements.

Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said: "The service sector more than regained the growth momentum lost in January, posting the sharpest expansion in output for 12 years as demand resilience and competitive pricing policies underpinned the joint best upturn in sales over the same period."

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