PMI: Services sector growth slows in 5 months

PMI: Growth in India's services sector fell to a five-month low in May amid stiff competition, price pressures and scorching heat. However, international markets recorded the fastest growth in new deals in a decade. The seasonally adjusted HSBC India Bharat Services PMI business activity index fell to 60.2 in May, the lowest level since December last year. It was 60.8 in April. The service sector gave impetus to manufacturing growth, if we understand the Price Managers Index (PMI), a PMI score above 50 indicates expansion in activity and below 50, it is considered contraction. Data for May revealed that India's services sector continued to boost productivity growth in the economy due to strong growth in new business. Increase in business confidence: According to the PMI survey, another positive point is that business confidence has increased significantly in eight months. Growth was supported by increased sales, faster productivity and stronger demand. However, there was some drag on growth due to competition and price pressures, HSBC global economist Maitreyi Das said, adding that India's services activity grew at a slower pace in May and domestic new contracts eased slightly but remained strong. This shows strong demand. Also Read: Maitreyi Das said price pressures increased in May due to progress in new export deals, increase in raw material and labor costs. Companies were only able to pass on a portion of the price hike to customers. The area that showed significant improvement in May was new export contracts, the fastest growth since the start of the series in September 2014. Survey participants saw strong growth in demand from Asia, Africa, Europe, the Middle East and the Americas. Meanwhile, the HSBC India Composite PMI Output Index fell to 60.5 in May from 61.5 in April. Also Read: Expectations-fuelled market rebounds, Sensex rises in afternoon: Services sector growth rate appears at lowest in 5 months