India Services PMI at 55.5 in July

The seasonally adjusted S&P Global India Services PMI Business Activity Index stood at 55.5 in July from 59.2 in June, the highest figure in 11 years. The latest readings indicated the slowest rate of growth in four months.

The recovery in the Indian services sector lost momentum during July due to weak sales growth and inflationary pressures, limiting the latest growth in business activity. While marketing efforts curtailed a further increase in new hires, competitive pressures and unfavorable weather dampened demand. That said, the weak recovery was complemented by easing price pressures. Input costs grew at the slowest rate since February, while output tariffs were raised to a weaker extent than in June, S&P Global said in a statement.

Pollyanna De Lima, associate director of economics at S&P Global Market Intelligence, said: “The latest results had many positives.

Business activity continued to grow strongly, with an equally strong uptick in new business, offering new services and flourishing marketing efforts.

“However, there was a notable loss of momentum for the Indian service economy as there was some reduction in demand from competitive pressures, high inflation and unfavorable weather. Both production and sales grew at the weakest rates for four months.

“Consistent with concerns that economic growth has weakened as we enter the second fiscal quarter, service providers indicated weak confidence in the medium-term business outlook. Only 5% of the panelists produced output growth during the coming 12 months. while 94% predict no change from current levels.

“Micro easing in cost inflation pressures by service firms struggling to maintain margins was also welcomed at a five-month low, and contributed to a softer rise in prices. Still, survey participants again reported food, fuel reported considerable stress from input, labor, retail and transportation costs.”

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Meanwhile, the S&P Global India Composite PMI Output Index fell to 56.6 from 58.2 in June, marking the slowest growth since March. Manufacturing accelerated with the sharpest increase in output since last November, while service activity growth was at its weakest in four months.

Composite PMI indices are the weighted averages of comparable manufacturing and services PMI indices.

The indices vary between 0 and 100, with readings above 50 indicating an overall increase over the previous month, and below 50 indicating an overall decrease. The indices are then adjusted seasonally.

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(This story has not been edited by Business Standard employees and is automatically generated from a syndicated feed.)

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