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India's May Services PMI Expands At Second Fastest Pace In Nearly 13 Years

The seasonally adjusted S&P Global India Services PMI Business Activity Index stood at 61.2 in May compared with 62 in April.

<div class="paragraphs"><p>Source: Unsplash</p></div>
Source: Unsplash

India's services activity expanded at the second-fastest pace in nearly 13 years in May, signalling robust growth.

The seasonally adjusted S&P Global India Services PMI Business Activity Index stood at 61.2 in May, compared with 62 in April, according to a statement. A reading above 50 indicates expansion in business activity, while a one below it signals contraction.

The composite PMI was unchanged in May at 61.6—the joint strongest in under 13 years, according to the release.

Favourable demand conditions, new client wins, and positive market dynamics reportedly supported output in the services sector. Demand strength underpinned another monthly increase in new business at service providers. External demand for Indian services continued to improve in May.

To accommodate sustained increases in new business, service companies sought to expand their operating capacities by hiring extra workers. In line with robust improvements in new work, outstanding business rose further midway through the first fiscal quarter.

Indian service providers reported higher food, input, transportation, and wage costs in May. Overall, input prices rose at a marked rate that was the fastest since last December and above its long-run average. Amid reports of rising cost burdens, firms charged more for their services in May.

Having quickened to the joint-strongest in close to six years, the rate of charge inflation was solid. Sub-sector splits showed the quickest increase in input costs at consumer services companies, while transport, information, and communication topped the rankings for charge inflation.

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 overall level of confidence fell slightly from April, however, amid concerns around competitive pressures.