logo
Robust demand propels India's services sector growth in February, PMI shows

Robust demand propels India's services sector growth in February, PMI shows

Reuters05-03-2025

BENGALURU, March 5 (Reuters) - Growth in India's services sector accelerated in February, supported by robust demand and a firm business outlook that led to a substantial increase in hiring, a survey showed.
Asia's third-largest economy expanded 6.2% year-over-year last quarter, lifted by government and consumer spending. The government expects India to grow 6.5% for the full financial year on expectations urban consumption will improve after weakening due to feeble job and income growth.
HSBC's final India services Purchasing Managers' Index (INPMIS=ECI), opens new tab, compiled by S&P Global, rose to 59.0 in February from January's 26-month low of 56.5 but was lower than a preliminary estimate of 61.1.
It has remained above the 50-mark separating expansion from contraction since mid-2021.
"Global demand, which grew at its fastest pace in six months according to the new export business index, played a major role in driving output growth for India's services sector," noted Pranjul Bhandari, chief India economist at HSBC.
Overall demand for services picked up in February, recovering from January's 14-month low, while growth in foreign orders reached its highest in six months.
Services companies remained optimistic about the business outlook for the upcoming 12-months. The future activity sub-index, gauging sentiment, stayed firm despite falling to a six-month low.
To meet rising demand, companies hired additional staff leading to a strong expansion in employment.
The rate of cost price inflation slipped to a four-month low. Despite that, firms passed on some of the extra burden to customers leading to a higher increase in charge inflation last month.
Inflation in India has mostly remained within the Reserve Bank of India's (RBI) target range of 2-6%, prompting the central bank to cut its key repo rate in February. The RBI lowered the interest rate to 6.25% from 6.50% and is expected to ease further to boost the economy.
The substantial rise in services growth offset a 14-month low expansion rate in manufacturing (INPMI=ECI), opens new tab, driving the overall Composite PMI to rise to 58.8 last month from 57.7 in January.

Orange background

Try Our AI Features

Explore what Daily8 AI can do for you:

Comments

No comments yet...

Related Articles

US will resume accreditation of Swiss investment advisers
US will resume accreditation of Swiss investment advisers

Reuters

time10 minutes ago

  • Reuters

US will resume accreditation of Swiss investment advisers

June 11 (Reuters) - The U.S. will resume processing applications from Swiss entities aiming to become registered investment advisers in the U.S., the U.S. Securities and Exchange Commission and Swiss financial market regulator FINMA said in separate statements on Tuesday. SEC had suspended new registrations for several years and would lift the ban with immediate effect after the watchdogs agreed on a direct transmission of information from Swiss institutions to SEC staff and on-site examinations, the statements said. "I am very pleased to announce that the SEC stands ready to provide prompt consideration of the registration applications from Swiss investment advisers," SEC Chairman Paul S. Atkins said. "I thank my FINMA counterparts for their collaboration and welcome their actions to make this possible."

Major lenders raise mortgage rates ahead of Reeves's spending review
Major lenders raise mortgage rates ahead of Reeves's spending review

Telegraph

time12 minutes ago

  • Telegraph

Major lenders raise mortgage rates ahead of Reeves's spending review

Two major lenders have raised mortgage rates amid fears Rachel Reeves's spending spree will slow down interest rate cuts. Barclays has announced rate rises of around 0.1 and 0.15 percentage points across a range of fixed-rate deals right after HSBC announced similar increases. It comes as the Chancellor prepares to publish her £300bn spending review today, having already set out an £87bn increase in public spending over the next two years. Experts said it could spell pain ahead for mortgage borrowers, as economists warn Reeves had reduced the chances of a rate cut this year. Barclays increased the rate on its five-year fixed-rate deal for those remortgaging with a 60pc loan-to-value ratio from 3.86pc to 4.03pc, leading some brokers to declare the end of sub-4 pc deals. Five-year swaps are currently at 3.71pc up from around 3.6pc a few weeks ago due to a number of factors including uncertainty around US trade policy. The Bank of England cut rates from 4.5pc to 4.25pc in May, but a rate cut in June looks unlikely after data revealed higher-than-expected inflation. Adrian Anderson, of broker Anderson Harris, said: 'I'm not surprised some lenders have increased rates because the cost of borrowing has increased slightly. 'Markets will be looking closely at the spending review. Rachel Reeves needs to strike a delicate balance between not upsetting the bond market while also not upsetting voters. If it looks like she is going to have to borrow more, that will impact swap rates.' Nicholas Mendes, of broker John Charcol, said: 'Looking further afield, mortgage rate cuts are likely to slow. Much of the expected base rate movement from the Bank of England has already been priced in, so unless we see a sharp shift in swap rates or economic data, there's limited room for significant reductions. 'If anything, we could be in for a period of relative stability – a bit of sideways movement rather than any dramatic repricing.' Harry Goodliffe, of broker HTG Mortgages, said: ' We're definitely seeing the sub-4pc deals slip away, and fast. Barclays and HSBC hiking rates feels like a mix of reacting to rising funding costs and not wanting to be overwhelmed with demand. No lender wants to be too competitive in a market this uncertain.' However, other lenders have moved in the opposite direction, with NatWest cutting rates by up to 0.23 percentage points. Aaron Strutt, of broker Trinity Financial said: 'Some borrowers still believe we are in a rate-cutting environment where mortgages are getting cheaper, but this is generally not the case.' He added: 'While the cost of funding does seem to have stabilised, it would not be a surprise to see more lenders pushing up their prices over the coming days.' According to financial data provider Moneyfacts, the average rate on a two-year fix fell 0.06pc to 5.12pc last month, compared to a 0.14pc drop a month prior, in a sign that the mortgage price war we saw earlier this year is cooling off.

Vietnam advances plans for international financial centre as trade risks grow
Vietnam advances plans for international financial centre as trade risks grow

Reuters

time18 minutes ago

  • Reuters

Vietnam advances plans for international financial centre as trade risks grow

HANOI, June 11 (Reuters) - Vietnam is moving forward with plans to establish an international financial centre to enhance its role in the global financial market and attract international capital flows, Finance Minister Nguyen Van Thang told parliament on Tuesday. The initiative could position Vietnam as a regional hub for financial activity, boosting its economic influence, according to Thang and a draft plan, now in its 30th version, seen by Reuters. The draft includes policies covering foreign exchange liberalization, banking activities, capital market development, tax incentives, and labour provisions targeting experts and investors. Foreign investment inflows into Vietnam in January-May rose 7.9% to $8.9 billion, the government said, while foreign investment pledges were up 51.1% to $18.4 billion. But the United States has threatened heavy tariffs on Vietnamese-made goods if it does not make major concessions, which could dampen its investment momentum. The country is an important manufacturing base for companies ranging from Samsung Electronics, Foxconn and Intel to Nike and Adidas. The National Assembly, Vietnamese parliament, will vote on the resolution on June 27. A key feature allows members of the financial centre to use foreign currency for transactions and secure international financing, according to the draft. "Members are permitted to establish trading floors and platforms for commodities, carbon credits, cultural products, and innovative startups," the draft said. Two sources familiar with the matter confirmed the draft as the latest version. Administrative procedures will be simplified, the draft added, creating more favourable conditions for participants. The financial centre will apply accounting and financial standards, including minimum capital adequacy and liquidity ratios, specific to both 100% foreign-owned banks and domestic banks, aligning with international practices. It will operate across two cities: financial hub Ho Chi Minh City and tourism-focused Danang. The government had earlier set a goal to have the centres operational this year.

DOWNLOAD THE APP

Get Started Now: Download the App

Ready to dive into the world of global news and events? Download our app today from your preferred app store and start exploring.
app-storeplay-store