Services PMI In India Dips To 58.5 In June, Lowest In Three Months

This is the lowest level since April when it was 62

India's services sector growth declined in June owing to inflation, a private survey showed on Wednesday. According to a headline figure in the Purchasing Managers' Index (PMI) survey by credit rating agency S&P Global, growth in services sector dropped to 58.5 in June from 61.2 in May. This is the lowest level since April when it was 62.

The services PMI has stayed above the key level of 50 that separates expansion in activity from a contraction for 23 months in a row.

Pollyanna De Lima, Economics associate director at S&P Global Market Intelligence, said, "Charge inflation showed some signs of stickiness, picking up only slightly from May but nevertheless reaching a near six-year high. Combined with manufacturing, output prices across the private sector increased at the sharpest pace in over a decade."

Service providers noted a sharp and quicker expansion in intakes of new business at the end of the first fiscal quarter. Positive demand trends, advertising, and favourable market conditions were among the reasons cited by survey participants for the latest upturn in sales.

"The latest PMI results for output charges coupled with upside risks to food prices suggest that interest rates are highly unlikely to be reduced as 2023 progresses," De Lima said.

This week India’s manufacturing sector activities also moderated in June from a 31-month high in May, but output remained in the growth territory, as new work orders expanded sharply amid favourable demand conditions.

The seasonally adjusted S&P Global India PMI fell from 58.7 in May to 57.8 in June. Despite the fall, the headline figure pointed to a considerable improvement in operating conditions, the survey said, adding that the demand strength positively impacted several other measures such as sales, production, stock building and employment.

The June PMI data pointed to an improvement in overall operating conditions for the 24th straight month. In PMI parlance, a print above 50 means expansion while a score below 50 indicates contraction. "June's PMI results again showed robust demand for Indian-made products, both in the domestic and international markets,” De Lima added.