Growth in the services sector picked up marginally in February because of better demand conditions and fewer Covid-19 cases but the rate of expansion was the second-slowest since last July and subdued by historical standards, according to a monthly survey. Price pressures led firms to shed jobs at the quickest pace since July.

The inflationary effects are likely to intensify as the survey was conducted before Russia’s invasion of Ukraine, which is driving a surge in oil prices. Reflecting a moderate rate of expansion, the seasonally adjusted IHS Markit India Services Business Activity Index rose to 51.8 in February from 51.5 in January.

“The upturn was attributed by panelists to greater bookings, better demand conditions and the retreat of the pandemic. However, some companies indicated that growth was dampened by competitive pressures, Covid-19 and higher prices,” the survey said.

A Purchasing Managers’ Index (PMI) reading of more than 50 indicates expansion while the level below 50 reflects contraction.

“New business and services activity expanded only modestly... Looking at the anecdotal evidence supplied by survey participants, inflationary pressures, input shortages and the local elections dampened growth,” Pollyanna De Lima, economics associate director at IHS Markit, said.