Service sector drives India's growth but manufacturing shows weakness
What's the story
India's service sector improved considerably in February, with the activity index climbing to 59 from January's 56.5, as per HSBC India Manufacturing Purchasing Managers' Index.
The surge comes as a stark contrast to the manufacturing index which plummeted to a 14-month low of 56.3 during the same period.
This is the lowest reading since December 2023. The deceleration in manufacturing activity was primarily due to decrease in demand.
Exports performance
Service sector exports outperform goods
Over the last one year, India's service exports have outshone goods exports.
This trend was further emphasized in GDP data released last week which noted the service sector as a major contributor to the economy's recovery in Q3.
The economy rebounded to 6.2% growth from a near two-year low of 5.6%.
The service sector is expected to grow by 7.3% in FY25, marginally down from last year's stellar 9% growth rate.
Official words
External sales expanded at fastest pace in 6 months: HSBC
"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, HSBC.
"Gains in international orders supported this trend, with service providers reporting better demand from clients in Africa, Asia, Europe, the Americas and the Middle East. Overall, external sales expanded at the fastest pace in six months," he noted.