PMI shows private sector is going strong

The HSBC's flash India Composite Purchasing Managers’ Index (PMI) indicates that the private sector is going strong. The PMI, calculated by S&P Global, was recorded at 61.7 this month, up from 61.5 in April. While the rise was slight, it was the 34th consecutive month above the 50-level, which separates growth from contraction.

“The composite PMI continued to rise in May, reaching the third strongest reading in nearly 14 years, backed by a sharp pick-up in the service sector,” Pranjul Bhandari, HSBC’s chief India economist, told the media.

The flash services PMI index hit a four-month high of 61.4 this month, higher than April’s 60.8. The preliminary manufacturing PMI, while indicating strong growth, was a bit lower than last month, declining to 58.4 from 58.8.

The increase in business activity is attributed to new business in the services sector, growing at the quickest rate since January, alongside rising manufacturing output and new orders.

The rise in international demand pushed up overall exports to expand at the fastest pace since September 2014, marking the second time export growth has hit a new high this year.

This bullish outlook has boosted business confidence for the next 12 months, particularly in the services sector, where it reached its highest level since May 2013. Manufacturers’ optimism was also at its peak in over nine years.

Underpinning the positive sentiment was an improvement in job creation across the private sector to the sharpest since September 2006, Reuters said. “Services jobs were added at the fastest pace in 21 months.”