India’s services sector exhibited remarkable resilience in May, even as the pace of growth slightly eased from the previous month.
According to the monthly survey conducted by S&P Global, the sector recorded the second-strongest rate of expansion in nearly 13 years, bolstered by favorable demand conditions and new client acquisitions. While the seasonally adjusted S&P Global India Services PMI Business Activity Index fell from 62 in April to 61.2 in May, the output still grew at the second-quickest pace since July 2010.
The survey’s findings underscored the positive trend of job creation within India’s dynamic service sector. For the 22nd consecutive month, the headline figure remained above the crucial threshold of 50, indicating continuous service sector expansion. This growth was further strengthened by companies increasing their workforce to accommodate higher workloads and capitalize on new opportunities.
“The PMI data for May stand as a compelling testament to prevailing demand resilience, impressive output growth and job creation within India’s dynamic service sector,” Pollyanna De Lima, Economics Associate Director at S&P Global Market Intelligence, said
Meanwhile, the S&P Global India Composite PMI Output Index held steady at 61.6 in May. The index, which combines services and manufacturing output, indicated that India’s private sector posted a rate of expansion in business activity that was the joint-best in just under 13 years.
Optimistic Outlook and Factors Affecting Growth
Service companies maintain an optimistic view and anticipate increased business activity over the next 12 months. The upbeat forecasts are attributed to various factors, including robust advertising, strong demand, and favorable market conditions. These elements contribute to the sector’s overall positive sentiment and bolster confidence in sustained growth.
Indian service providers faced challenges in May as they grappled with higher food, input, transportation, and wage costs. To mitigate these challenges, companies adjusted their pricing, leading to increased service charges. While this could potentially impact purchasing power and the affordability of services, organizations are actively seeking operational efficiencies and exploring alternative sourcing options to navigate these obstacles.
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