PMI: India’s services sector growth slowed to a five-month low in May due to tougher competition, price pressures and extreme heat. However, new contracts for international markets registered the fastest growth in a decade. This information is provided in the monthly survey. The seasonally adjusted HSBC India Bharat Services PMI business activity index fell to 60.2 in May, the lowest level since December last year.
In April it was at 60.8. In Purchasing Managers’ Index (PMI) parlance, a score above 50 indicates expansion in activity and a score below 50 indicates contraction. Data from May showed that strong growth in new business is driving output growth in India’s service economy. Another positive, according to the survey, was that business confidence increased the most in eight months. Growth was supported by increased sales, acceleration in productivity and strong demand.
India’s service activity slows down a bit in May
However, there were some constraints to growth due to competition and price pressures. “India’s services activity grew at a slightly slower pace in May, with domestic new contracts easing slightly but remaining strong,” said Maitreyi Das, global economist at HSBC. This reflects strong demand.” He said, “If we talk about prices, cost pressures increased in May due to increase in raw material and labor costs.
Companies were able to pass on only a portion of the value addition to consumers.” The area showing significant improvement in May was new export contracts…with the fastest growth since the series’ inception in September 2014. Survey participants saw strong growth in demand from Asia, Africa, Europe, the Middle East and the Americas. Meanwhile, the HSBC India Composite PMI Output Index fell to 60.5 in May from 61.5 in April.