India’s service sector Purchasing Managers’ Index declined to 61.2 in May this year from April’s 62.0. At 61.2, the May services PMI is the second-highest print in just under 13 years. It has also stayed above the key level of 50 that separates expansion in activity from a contraction for 22 months in a row.
The PMI is a survey-based indicator based on the responses of around 400 service companies. The sectors it covers includes non-retail consumer services, transport, information, communication, finance, insurance, real estate, and business services. An index is calculated for each sector, all of which are then combined to give an overall PMI figure.
As per the Reuters report, the S&P Global India Service PMI outstripped the Reuters Poll expectation of 60.0.
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 service sector accounts for more than 50 per cent of India’s gross domestic product. Asia’s third-largest economy expanded 6.1 per cent in the March quarter, one of the fastest growing emerging markets. This was despite the RBI raising interest rates by 250 basic points since May last year, it was a bif to cap inflation, which has held above the central bank’s 2 to 6 per cent target range for most of 2022.
“Inflationary pressures continued to pose a challenge for service providers, with panelists noting rising costs for food, inputs, labour and transportation,” said Pollyanna De Lima, economics associate director at S&P Global Market Intelligence.
