India Services PMI drops to 61.2 in May

India Service PMI was down at 61.2 in May 2023, the seasonally adjusted S&P Global India Services PMI Business Activity Index highlighted a further expansion in output across the sector. However, falling from 62.0 in April, the latest reading indicated the second-strongest rate of growth in just under 13 years. Favorable demand conditions, new client wins and positive market dynamics reportedly supported output.

Demand strength underpinned another monthly increase in new business at service providers. The rate of expansion softened from April's near 13-year high but was among the strongest over this period.  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, as per a business survey shown on Monday.

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. "However, 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.

Source: Media reports