Services firms recorded a sharp increase in business activity, the steepest in four months, while factory production rose at the slowest pace since February, said S&P Global.
Propelled by a sharp acceleration in services activity, India’s business activity expanded at the third strongest rate in nearly 14 years. The HSBC Flash India Composite Output Index, or Flash PMI, rose to 61.7 in May from 61.5 in April, data released by S&P Global showed on Thursday.
Services firms recorded a sharp increase in business activity, the steepest in four months, while factory production rose at the slowest pace since February, said S&P Global. Nevertheless, manufacturing continued to record a stronger rate of growth than services, it said.
In May, the HSBC Flash India Services PMI Business Activity Index rose to 61.4 from 60.8 in April, while the HSBC Flash India Manufacturing PMI Output Index fell to 62.4 from 63.0.
Latest data highlights signs of strength in new export orders across both the manufacturing and services sectors. At the composite level, international sales expanded at the fastest rate since the inception of the series in September 2014, said S&P Global. “Panellists noted gains from many parts of the world, including Africa, Asia, Australia, the Americas, Europe and West Asia.”
Pranjul Bhandari, chief India economist at HSBC, said although the manufacturing sector growth slowed slightly in May, driven by a slowdown in new orders and production, “the rise in output in the manufacturing industry continued to surpass that in the services economy”.
Meanwhile, amid reports of higher labour and material costs, input prices across the private sector rose at the fastest pace in nine months. There were mentions that prices for chemicals, food, plastics, electronic components and electrical items had risen.
Aggregate selling prices likewise rose to a greater extent in May. The faster increase in charges was recorded in the manufacturing industry, contrasting with the trend seen for input prices, noted S&P Global.
On the future outlook, Bhandari said that the level of optimism about the year ahead increased to its highest in over 11 years, resulting in firms increasing their staffing levels. “However, higher input costs in both sectors led to further margin squeezes, particularly for service providers,” she said.
The Flash India composite PMI is a seasonally adjusted index that measures the month-on-month change in the combined output of India’s manufacturing and service sectors. Flash data are calculated from 80-90% of total responses of surveyed firms and are intended to provide an accurate early indication of the final data — released during the first week of the month.
The index has been compiled by questionnaires sent to survey panels of around 400 manufacturers and 400 service firms. Survey responses are collected in the second half of each month and indicate the direction of change compared to the previous month. A reading above 50 denotes expansion in activity, while a reading below means contraction.
Source:financialexpress.com