Services sector PMI falls to five-month low in May as domestic demand slows

Mumbai: Activity in India's services sector slowed to a five-month low in May due to a slowdown in domestic demand. However, export demand for services remained strong and job creation was at a 21-month high.

The HSBC Purchasing Managers' Index (PMI) for the services sector compiled by S&P Global fell to 60.20 in May from 60.80 in April. However, the index managed to stay above 50 for the 34th consecutive month in May. A PMI above 50 is considered expansion of that sector.

Domestic orders declined marginally but export demand rose to a decade high. May's growth in services exports is the highest since the sub-index was introduced a decade ago to assess the state of export demand.

A survey report prepared by S&P Global said that demand for services remained subdued last month due to the heat at home. Export demand is expected to remain strong given the improvement in the Chinese economy and resilience in economic activity in the US.

The strong demand has pushed the business outlook for the next 12 months to an eight-month high.

New job creation by optimistically looking companies was also the highest since August 2022.

As raw material prices rose, service providers were forced to raise service charges. The composite index of services and manufacturing sector also fell to 60.50 in May.