June 5 (Punjab Khabarnama) : India’s service sector growth fell to a five-month low in May due to tough competition, price pressure and extreme heat. However, new contracts from international markets recorded the fastest growth in a decade. This information has been given in a monthly survey. The seasonally adjusted HSBC India Services PMI business activity index fell to 60.2 in May, the lowest level since December last year. It was at 60.8 in April.
In the language of Purchasing Managers Index (PMI), a score above 50 means expansion in activities and a score below 50 means contraction. The May data showed that strong growth in new business continued to strengthen production growth in India’s service economy. According to the survey, another positive thing was that business confidence increased the most in eight months. Increase in sales, rapid productivity and strong demand supported the growth. However, growth was also somewhat hampered due to competition and price pressures.
Maitrayee Das, global economist at HSBC, said, “India’s service activity grew at a slightly slower pace in May, with domestic new contracts declining slightly but remaining strong. This reflects strong demand.” He said, “On the price front, cost pressures increased in May due to the rise in the cost of raw materials and labor. Companies were able to pass on only a part of the price increase to customers.” The area that improved significantly in May was new export contracts … the growth in which was the fastest since the start of the series in September 2014. Survey participants saw strong growth in demand from Asia, Africa, Europe, West Asia and America. Meanwhile, the HSBC India Composite PMI Output Index fell to 60.5 in May from 61.5 in April.
