Pointing to the fastest increase in output in the current four-month sequence of expansion, India's services sector activity grew in May. The seasonally adjusted Nikkei Business Activity index surged to 52.2 in May from 50.2 in April, marking a fourth month above the 50-level that separates growth from contraction. Output at goods producers rose at a softer rate than in April, but one that outstripped that seen in the service economy. The seasonally adjusted Nikkei India Composite PMI Output Index which measures both manufacturing and services also increased to 52.5 in May from 51.3 in April to reach at a seven month high.
The survey results stated that service providers took on extra staff in May in order to cope with greater workloads, noting that the job creation accelerated in May month to near four year high. Supporting the pick-up in services activity growth was a quicker rise in new business inflows. However, factory jobs witnessed a fall in the latest month. The survey further stated that the stronger upturn in services new work helped to offset the slowdown in growth of manufacturing orders and new work across the private sector economy in May.
On the cost front, the report said that input costs and output charges increased at softer rates which were broadly negligible in the context of historical PMI data. Outstanding business volumes at service providers rose further in May, while level of unfinished work held by manufacturing firms also expanded at a modest, though quicker, pace. The report further said that business sentiment weakened on the back of growing concerns regarding competitive pressure and added that outstanding business volumes at service providers rose further in May, taking the current sequence of continuous accumulation to one year.