India's services sector activity shows strength in the month of February with great contribution from quicker expansion in new work orders that supported a faster increase in output and job creation. New business supported by the service companies significantly increased during the month because of the underlying demand.
A monthly survey showed on Tuesday that the seasonal Nikkei India Services Business Activity Index increased to 52.5 in February from 52.2 of the previous month which indicates an upturn in sector's output. The PMI of the services is expanding for nine consecutive months. Scores below the 50 PMI shows a contraction in the output of the sectors while scores above 50 mean that the sector is expanding.
The growth in business activity in India strengthened in February because of the increasing expectations of further improvements in domestic demand, advertising efforts, and the offering of new services. One area of weakness, however, is seen in international trade as it drops down from January. A survey last week showed that the manufacturing activity in India is improving at a 14-month high in the month of February.
New businesses services by the companies also emerged significantly. In February, the new business received by service companies increased largely because of the high demand. The survey reported that domestic demand caused the upturn in new orders in the services sector which is highlighted by the recovery in external sales from a contraction.
Pollyanna De Lima, Principal Economist at HIS Markit and author of the report, said that faster increase in new work and business activity supporting one of the best upturns in jobs for eight years.
The Nikkei India Composite PMI Output Index which maps the manufacturing and services industry increased to 53.8 from 53.6 in January. It indicates that the private sector activity in the country is accelerating.
Lima said that the results of the survey showed a mismatch in India's manufacturing and services.
Lima said that Indian economic growth strengthened halfway through the final quarter of FY18 to the second fastest since last July. She added that the acceleration was driven by a thriving manufacturing sector, where production growth hit a 14-month high. She also noted that manufacturing new export order increases sharply over a backdrop of the weakening global demand and the growing global trade frictions. The PMI data showed that the industry that produces Indian goods surpassed the emerging industries of Brazil, Russia, and China by a considerate margin.
