India Services Growth Softens To 5-Month Low

India’s service sector activity continued to expand strongly in May, though at the slowest pace in five months amid price pressures and the intensive heatwave, the latest survey data from S&P Global showed on Wednesday.

The seasonally adjusted HSBC services purchasing managers’ index dropped to 60.2 in May from 60.8 in April. However, a score above 50 indicates expansion in the sector. The flash score was 61.4.

New orders grew at the slowest pace so far this year as fierce competition and extreme heat across the country dampened growth. Nonetheless, the overall expansion was supported by favourable economic and demand conditions, in addition to successful advertising.

On a more positive note, export orders increased at the fastest pace since the survey history began in September 2014. Indian service providers received strong demand from Asia, Africa, Europe, the Middle East, and the US.

Firms have raised their staffing numbers to the greatest extent since August 2022.

On the price front, cost pressures intensified in May amid higher costs for materials such as meat, packaging, and vegetables, along with increased labour charges.

Looking ahead, business confidence among Indian service companies remained optimistic amid expectations that marketing efforts would bear fruit, coupled with improved customer engagement, demand strength, and buoyant economic conditions.

The composite output index declined to 60.5 in May from 61.5 in the previous month, indicating the slowest rate of expansion in the Indian private sector since last December.

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