The Service Shift: India's Final PMI at 58.8 Sparks Fresh Debate on Growth Trends!

India’s services sector cooled off in May, with the HSBC/S&P Global Services PMI coming in at 58.8—down from the flash estimate of 61.2 but still comfortably above the 50-mark that separates growth from contraction. While the final reading missed earlier expectations, it marks the 47th straight month of expansion for the sector.

 

Key highlights from the latest data show that services activity remains robust, even as the pace of growth eased from April’s 61.2. The softer reading reflects a moderation in both domestic and international demand, with new business rising at a slower rate than in previous months. Despite this, companies continued to hire, and employment in the sector grew for the 36th consecutive month. Input costs edged higher, prompting many service providers to pass on some of these expenses to clients through increased selling prices.

 

Business sentiment, while still positive, has become more cautious amid rising competition and concerns about the global economic outlook. Finance and insurance led the pack among service sub-sectors, followed by consumer services, but all major categories reported some slowdown in momentum.

 

Analysts say the dip is not a cause for alarm, as the sector remains historically strong and well above its long-term average. However, they’ll be watching closely for signs of further cooling, especially if global trade uncertainties persist.

 

Sources: S&P Global, Moneycontrol, Trading Economics