Nikkei India PMI says services sector grew fastest in May
The Dollar Business Bureau
The Nikkei India Services Purchasing Managers’ Index (PMI) which tracks the services sector output monthly, said that India’s services sector activity increased at the fastest pace in May 2017. This is because of the increased work orders that prompted companies to employ more workforce to handle the workloads. PMI said the Index rose to 52.2 in May compared to 50.2 in April. Although the job growth rate was moderate, it was fastest in almost 4 years.
The author of the report, Pollyana De Lima commenting on it said, “The pick-up in service sector growth seen mid-way through the first quarter (FY) suggests that GDP could expand at a faster rate should growth momentum be maintained in June, though there are downside perils to this.”
Service firms also mirrored the output growth with communiques mentioning expansion plans, favourable marketing policies, new verticals as the positives that supported the 12-month outlook.
The Nikkei India Composite PMI Output Index that shows both the manufacturing and services sector activity showed a seven-month high of 52.5 in May from 51.3 in April as the strong growth in the services sector balanced the slow growth of the manufacturing sector.
Commenting on the balance Lima said, “Despite accelerating from April, rates of increase in both services activity and new work are much weaker than typical for India. Moreover, business confidence fell as a reflection of firms’ concerns regarding competitive pressures and lacklustre demand.”
On price rise, the report said, inflation rates were muted which was lower than long-run average. Lima further noted that "...worries that this period of uninspiring growth may continue for some time might prompt the RBI to lower the benchmark rate in order to support the economy".
The Reserve Bank in its monetary policy review meet on April 6 kept the repurchase or repo rate -- at which it lends to banks -- unchanged at 6.25 per cent, but increased reverse repo rate to 6 per cent from 5.75 per cent. RBI's next policy review is scheduled this week.