India’s Services Sector Rebounds in February, Employment Surges: PMI

India’s services sector witnessed a sharp rebound in February, driven by improving domestic and international demand, which led to a faster expansion in output and a notable increase in employment, according to a monthly survey released on Wednesday.

The seasonally adjusted HSBC India Services PMI Business Activity Index climbed to 59.0 in February, up from January’s 26-month low of 56.5, signaling a robust pace of expansion. In PMI terms, a reading above 50 indicates growth, while a score below 50 signals contraction.

"India's services business activity index rose to 59.0 in February 2025, up considerably from January's 26-month low of 56.5. 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," said Pranjul Bhandari, Chief India Economist at HSBC.

The survey highlighted that productivity gains, strong underlying demand, and an increased influx of new business contributed to the sector’s growth. Gains in international orders further bolstered the expansion, with service providers reporting stronger demand from clients across Africa, Asia, Europe, the Americas, and the Middle East.

To accommodate the rising business volume and ease capacity pressures, Indian service sector firms actively pursued recruitment drives. The survey noted that employment expanded sharply, marking one of the highest growth rates since data collection began in December 2005.

Optimism in the services sector was underpinned by factors such as advertising efforts, improved customer relations, efficiency gains, and healthy demand conditions. Around 25% of survey respondents expected growth in the coming year, while fewer than 2% were pessimistic.

Meanwhile, the HSBC India Composite Output Index, which combines manufacturing and services PMI data, rose from 57.7 in January to 58.8 in February, reflecting a substantial pace of expansion. Employment at the composite level grew at a marked rate, staying close to January’s record high, while cost pressures remained at their lowest since October 2024.

The HSBC India Services PMI is compiled by S&P Global based on responses from around 400 service sector firms.