Flash India PMI expands to 60.6 in February on robust service sector indicators

HSBC reports rapid growth in India's private sector activity, with services leading the way, indicating economic expansion.

India’s service sector activity, as measured by the HSBC Flash India Composite Purchasing Managers’ Index (PMI), rose to 60.6 in February, up from 57.7 in January 2025, according to a statement from HSBC. This marks the fastest growth in six months. The HSBC Flash PMI reflects private sector activity before the final reading is published, based on a sample that includes about three-quarters of the total companies surveyed for the final reading. A value above 50 indicates expansion.

The rise in private sector activity was driven by a Flash services PMI of 61.1 for February, up from 56.5 in the final reading for January. However, the Flash Manufacturing PMI showed a slight slowdown, dipping to 57.1 in February from 57.7 in January. Despite this moderation in the pace of expansion, the manufacturing sector remained above the long-run average of 54.1, which HSBC noted is “consistent with robust improvement in the health of the sector.”

“Global restocking continues to boost new export orders. A healthy acceleration in both orders and output is keeping firms optimistic about the future. While input prices eased, output prices rose at a faster pace, leading to improved margins, particularly for goods producers,” said Pranjul Bhandari, Chief Economist at HSBC. The increase in aggregate sales has driven a greater need for companies to hire, with the services sector seeing a faster pace of hiring compared to the goods sector.

Export orders grew at a sharper pace for service providers than for manufacturers, in line with recently released trade data. This trend is expected to strengthen with a depreciating rupee, Bhandari added in a research note. Of the 100 indicators surveyed, 65% showed an upward trend in the third quarter of fiscal 2025, compared to 55% in the September quarter, reflecting a recovery from the slump in the second quarter. Inflation is expected to ease, which could prompt the Reserve Bank of India (RBI) to cut rates by another 25 basis points in the April Monetary Policy Committee (MPC) meeting, HSBC concluded in its research note.