The country's services sector, after registering a 12-month high in January, witnessed "continued, albeit slower" pace of expansion in February amid a decline in new business orders.
An HSBC survey says growth in the services sector, which makes up for nearly 60 per cent of the country's economic output, stood at 54.2 in February (down significantly from 57.5 in January).
Growth in
service sector activity has now been sustained for 16 successive months and service providers are optimistic about the 12-month outlook for the sector.
"Activity in the services sector grew at a slower clip led by a deceleration in new business, but backlogs of work still increased," HSBC Chief Economist (India and ASEAN) Leif Eskesen said.
Around 42 per cent of survey respondents anticipate activity levels to be higher in the upcoming year, compared with only 3 per cent that expect a reduction.
The month of February, however, saw output
growth in the manufacturing sector being accelerated.
Accordingly, the HSBC India Composite Output Index - which maps both the manufacturing and services index - stood at 54.8 in February, down from 56.3 in January.
The latest reading indicated that private sector output growth eased to a three-month low. Meanwhile, private sector companies continued to pass on higher costs to clients through increased output prices.
With the rate of inflation accelerating in both manufacturing and services firms, the overall pace of price rise was sharp, and the fastest in seven months.
"Input price inflation picked up notably, which was passed on to prices charged. The numbers underscore that the room for monetary policy easing is very limited," Eskesen said.
In its January 29 policy review, the Reserve Bank of India (RBI) after a nine-month long hawkish monetary policy stance, slashed its key interest rates by 0.25 per cent.
The central bank had then said that with
inflation showing signs of remaining range bound, it was now critical to arrest the loss of growth momentum.
With inputs from PTI
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