Services activity pick up in February – Times of India

BENGALURU: Growth in India’s key services industry was lower than expected in February, despite the easing of Covid-19 restrictions, a private survey showed, while price pressures pushed firms to leave jobs at the fastest pace since July. inspired to.
Those inflationary effects are likely to intensify as the survey was conducted before Russia’s invasion of Ukraine, which is driving up oil prices – India’s biggest import.
The Services Purchasing Managers’ Index, compiled by IHS Markit, rose to 51.8 in February, from a six-month low of 51.5 in January.
Although above the 50-mark that separates growth from contraction for the seventh month, it was well below the 53.0 expected in a Reuters poll.
Pollyanna de Lima, economics associate director at IHS Markit, said: “Growth in the services sector failed to rebound meaningfully, as many would have expected, as COVID-19 cases dropped significantly from the January new wave and restrictions were lifted. Given.”
“Growth has slowed given the anecdotal evidence provided by survey participants, inflationary pressures, lack of inputs and local elections.”
Although new business expanded at a slightly faster pace in February, it remained sluggish. Foreign demand has been in the contraction zone for two years and last month’s rate of decline was the sharpest since September.
This suggests that Asia’s third-largest economy, which lost momentum in the last quarter, may struggle to regain its growth.
Meanwhile, service firms reduced their workforce for a third month and the rate of layoffs was the fastest in seven months.
Despite the slower rate of increase in input prices compared to January, inflationary pressures remained high and firms were able to transfer only a small part of that burden to customers. Charged prices rose at the weakest rate in five months.
Rising inflation on the one hand and rising uncertainties over the economic impact of the Russia-Ukraine crisis on the other may make it difficult for the Reserve Bank of India to take a policy decision.
“Despite the recovery from January, business optimism among services firms remained muted relative to its trend, due to pandemic-related uncertainty and inflationary pressures,” De Lima said.
Nevertheless, improving services activity and accelerating manufacturing growth meant that the overall index rose to 53.5 in February, from 53.0 in January.