Services sector growth 2nd fastest in 13 years

PTI

New Delhi, June 5

India’s services sector growth eased slightly in May, but registered the second-strongest rate of growth in close to 13 years, on favourable demand conditions and new client wins, a monthly survey said on Monday.

The seasonally adjusted S&P Global India Services PMI Business Activity Index fell from 62 in April to 61.2 in May. Despite falling from April, the latest reading indicated that output increased at the second-quickest pace since July 2010.

Above threshold for 22nd month

• S&P Global India Services PMI Business Activity Index fell from 62 in April to 61.2 in May
• Despite falling from April, the latest reading indicated that output increased at the second-quickest pace since July 2010
• For the 22nd straight month, the headline figure was above the neutral 50 threshold

For the 22nd straight month, the headline figure was above the neutral 50 threshold. In Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion while a score below 50 denotes contraction.

“The PMI data for May stand as a compelling testament to prevailing demand resilience, impressive output growth and job creation within India’s dynamic service sector,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.

Additionally, monitored companies expanded their workforces to accommodate for higher intakes of new work.

Going ahead, services companies maintained an upbeat view that business activity would increase over the coming 12 months.

“Advertising, demand strength and favourable market conditions were among the reasons cited for optimistic forecasts,” the survey said. Meanwhile, the S&P Global India Composite PMI Output Index — which measures combined services and manufacturing output — stood at 61.6 in May, unchanged from April.

On the price front, Indian service providers reported higher food, input, transportation and wage costs in May. Amid reports of rising cost burdens, firms charged more for their services in May.