First expansion of private sector output since June 2013
The seasonally adjusted HSBC India Composite Output Index indicated a fractional rate of expansion as it posted 50.3 in February (January: 49.6). The latest growth was centred on the manufacturing sector. Private sector output across India rose for the first time in eight months during February.Adjusted for seasonal influences, the headline HSBC Services Business Activity Index rose from 48.3 in the previous month to 48.8 in February. This was consistent with a slight rate of contraction, and one that was the slowest in the current eight-month period of reduction. Where output declined, this was linked by survey respondents to lower levels of incoming new work and economic instability across the country. Sector data indicated that four of the six monitored categories recorded falling business activity, with the fastest decrease noted in Financial Intermediation.
February data highlighted an eighth consecutive monthly decline in new business placed with Indian services firms. That said, the pace of reduction eased to the weakest in that sequence and was marginal overall. Panellists reported weaker demand, a fragile economy and competitive pressures. Three of the six monitored sub-sectors registered lower new orders, namely Financial Intermediation, Renting & Business Activities and Transport & Storage. New business rose at a marked pace in the manufacturing economy, supporting growth across the private sector as a whole.
Staffing levels at service providers were broadly unchanged in February, with the index measuring employment posting only fractionally above the 50.0 no change mark. Payroll numbers at manufacturers rose, albeit marginally. Concurrently, workforce numbers across the private sector as a whole were little-changed from those seen in January.
Indian service providers reported higher input prices. The rate of cost inflation was solid, but eased since January and was weaker than the series average. Higher food, fuel and gold prices were cited by panellists as the main drivers of the rise in input costs. Input price inflation in the private sector accelerated to the strongest in four months, as manufacturers registered a sharp and accelerated increase.
Reflective of sustained increases in costs, prices charged by services companies were raised further in February. Although the fastest in three months, the rate of charge inflation was moderate and below its average. Output prices in the private sector as a whole rose at a moderate pace that was unchanged from January.
Indian services companies maintained their positive outlook for output growth over the coming year, which they mainly linked to planned increases in marketing, forecasts of stronger demand and hopes of an overall improvement in economic conditions.
Powered by Capital Market - Live News
