New Delhi: India’s services PMI (Purchasing Managers’ Index) fell to 61.2 in May 2023 from 62.0 in the previous month even as the latest reading indicated the second strongest rate of growth in a little less than 13 years.
“Favourable demand conditions, new client wins, and positive market dynamics reportedly supported output,” said S&P Global survey on Monday.
A reading above 50 means expansion in activities while a print below shows contraction.
As per the survey, output rose in May at the second-quickest pace since July 2010, supported by sustained growth of new business in the face of positive demand trends.
The May PMI data indicated strong growth and rising inflationary pressures in the service economy. External demand for Indian services continued to improve in May, highlighted by a fourth successive rise in new export business.
“Moreover, the pace of expansion was solid and the quickest in the calendar year-to-date,” the private survey said.
Commenting on the latest reading, Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence said, “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.”
De Lima, however, stated that inflationary pressures continued to pose a challenge for service providers, with panelists noting rising costs for food, inputs, labour and transportation.
“Faced with the delicate task of balancing these increases and maintaining affordable prices for consumers, firms opted to lift selling prices again in May. Worryingly, the survey showed the joint-fastest upturn in output charges for nearly six years,” said the S&P Global economist