PMI services at 3-mth low

New Delhi India’s services sector growth eased to a three-month low in June, but service providers continued to signal positive demand trends, which resulted in a stronger increase in new business volumes and further job creation, a monthly survey said on Wednesday.

The seasonally adjusted S&P Global India Services PMI Business Activity Index fell from 61.2 in May to 58.5 in June. Despite falling from May, the latest figure was consistent with a sharp pace of growth.

For the 23rd straight month, the headline figure was above the neutral 50 threshold. In Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.

According to survey members, the upturn stemmed from ongoing increase in new business, a healthy demand environment and marketing initiatives.

“Demand for Indian services continued to surge higher in June, with all four monitored sub-sectors registering quicker increases in new business inflows,” said Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence.

This bullish pick-up in growth momentum supported a further sharp upturn in business activity and encouraged another uplift in employment figures, boding well to near-term growth prospects, Lima added.

On the price front, there were mixed trends. Input costs rose at a slower rate that was broadly aligned with its long-run average, but charge inflation quickened to a near six-year high. “Combined with manufacturing, output prices across the private sector increased at the sharpest pace in over a decade,” Lima said.

One-in-10 firms noted higher operating expenses, citing greater food, construction material and wage costs.

Near-term Growth Prospects

• Indicating expansion, PMI above 50 for 23rd straight month
• 1-in-10 firms noted higher operating expenses
• Higher food prices, construction material and wage costs