India's services PMI declines to 61.1 in May from 62.0 in April
India's services PMI declined to 61.2 in May from 62.0 in April, indicating a slowdown in the country's service sector, reports suggest.
PremiumIndia's service sector Purchasing Managers' Index declined to 61.2 in May this year from April's 62.0. However, it held at a pace as demand remained strong despite high inflationary pressures, a business survey showed on Monday.
The S&P Global India Services PMI outstripped the Reuters poll expectation of 60.0, according to a report published by Reuters.
That marked the longest streak of expansion in almost 12 years with the index above the 50-mark that separates growth from expansion for 22 months.
The services sector accounts for more than 50% of India's gross domestic product. Asia's third-largest economy expanded 6.1% in the March quarter, one of the fastest-growing emerging markets.
This was despite the Reserve Bank of India (RBI) raising interest rates by 250 basis points since May last year, in a bid to cap inflation, which has held above the central bank's 2%-6% target range for most of 2022, Reuters reported.
Last month, the survey showed input costs rose at the fastest pace this year and companies passed on the burden to customers at the quickest rate since November's over-five-year peak.
Pollyanna De Lima, economics associate director at S&P Global Market Intelligence said, "Inflationary pressures continued to pose a challenge for service providers, with panelists noting rising costs for food, inputs, labor 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."
In April, India's services activity expanded at the fastest pace in nearly 13 years, driven by robust demand. It was above the 50-mark separating growth from contraction for a 21st straight month, the longest stretch of expansion since August 2011.
Along with robust domestic demand, international demand was strong as the sub-index rose to a four-month peak and business optimism hit its highest since December.
However, employment generation in the services industry only saw a marginal uptick as most firms reported sufficient labor capacities to meet rising demand.
(With Reuters inputs)
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