Activity in the Indian-led services sector grew at the fastest pace in 12 years in February, a survey found, on strong demand, while pricing pressures eased further amid modest employment growth and pressure on capacity in the country.

The PMI (Purchasing Managers’ Index) rose to 59.4 in February from 57.2 in January, the highest level since February 2011 and well above any Reuters poll forecast for a drop to 56.2.

It was the 19th consecutive month above the 50 mark separating growth from contraction, the longest stretch of expansion since June 2013.

Solid gains in services activity pushed the composite index to 59.0 in February from 57.5 in January, even as manufacturing growth slowed to a four-month low. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) came in at 55.3 in February, a little change from 55.4 in January. All forecasts in a Reuters poll called for a drop to 56.2.

It was the 19th consecutive month above the 50 lines separating growth from contraction, the longest stretch of expansion since June 2013. Solid gains in services activity pushed the composite index to 59.0 in February from 57.5 in January, even as manufacturing growth slowed to a four-month low. The seasonally adjusted S&P Global India Manufacturing Purchasing Managers’ Index (PMI) came in at 55.3 in February, a little change from 55.4 in January.

The strong report is likely to offer hope for Asia’s third-largest economy, which saw an increase in annual growth in October-December from July-September as pent-up demand eased and manufacturing continued to weaken from 6.3% to 4.4%.

“The service sector more than regained the growth momentum lost in January…as demand resilience and competitive pricing policies underpinned the joint-best upturn in sales over the same period,” said Pollyanna De Lima, economics associate director at S&P Global.

Although new business surged at its quickest rate in eight months, firms only increased hiring marginally and business confidence was the lowest in seven months.

“It seems that hiring growth was also dampened by a lack of confidence in the business environment. The degree of optimism recorded in February was below the historical trend as some companies doubted demand would remain this resilient,” De Lima added.

“It seems that hiring growth was also dampened by a lack of confidence in the business environment. The degree of optimism recorded in February was…below the historical trend as some companies doubted demand would remain this resilient,” De Lima added.

Input costs rose at the slowest rate since September 2020, allowing companies to raise prices at the slowest pace in a year.

The data showed that overall positive sentiment about the outlook for business activity this year was little changed from January and remained below the long-term average.