Meanwhile, Indian private sector production grew at the fastest pace in four months during February.
A monthly survey on Wednesday said that India's services activity expanded at the fastest rate in a year during February, while employment declined further and companies registered faster growth.
In the midst of better demand and more favorable market conditions, the Commercially Adjusted Adjustment Activity Activity Index in India increased from 52.8 in January to 55.3 in February.
The index was above the critical 50 mark separating growth from contraction for the fifth consecutive month during February as the roll-out of COVID-19 vaccines improved business confidence towards growth prospects.
Although the new scope expanded for a fifth straight month, panelists continued to indicate that the COVID-19 epidemic and travel restrictions have curbed international demand for their services.
The survey noted, “New export orders declined for the twelfth month running at the weakest rate since last March.”
Meanwhile, Indian private sector production grew at the fastest pace in four months during February. The combined PMI output index, which measures combined services and manufacturing output, increased from 55.8 in January to 57.3 in February.
“Economic activity is generally expected to recover in the last quarter of FY 2020/21 after coming out of a technical slowdown in Q3, and the latest improvement in the PMI indicator points to stronger expansion in the fourth quarter, whether of growth The pace should be sustained in March, ”said Pollyna de Lima, economics associate director at IHS Markit.
On the domestic macro-economic front, after contracting for two consecutive quarters, the Indian economy registered a growth of 0.4% in the October-December quarter mainly due to good performance by the farm, manufacturing, services and construction sectors.
The IHS Market India Services PMI further noted that despite overall new business growth, service sector employment declined further during February, with many companies suggesting that the COVID-19 epidemic restricted labor supply.
“Further manufacturing in both manufacturing and service sectors declined, which could also limit domestic consumption in the coming months. However, with the increase in capacity, strengthening business sentiment and broadening the immunization program, it seems That the best days are ahead. Let us know about employment growth, “Ms Lima said.
On the price front in February, amid reports of higher freight, fuel and retail prices, total input costs increased. In addition, the rate of inflation became the strongest since February 2013.
However, competitive pressures prevented companies from raising their own fees. “Once firms' additional costs start feeding customers through price increases, demand can strengthen,” Ms. Lima said.
It is expected that the COVID-19 vaccine program will be successful in reducing the number of cases across the country by reducing positive expectations towards growth prospects. The survey noted that the overall degree of optimism about the 12-month outlook for business activity strengthened.