India's service sector activity logged a further sharp expansion in May amid favorable demand conditions despite rising inflationary pressures, the results of the purchasing managers' survey by S&P Global showed on Monday.
The services Purchasing Managers' Index, or PMI, dropped to 61.2 in May from 62.0 in April. Nonetheless, a score above 50 indicates expansion in the sector.
Further, the latest expansion was the second-strongest in just under 13 years.
Output growth in May was largely attributed to favorable demand conditions, new client wins, and positive market dynamics.
The rate of increase in new orders softened from April's near 13-year high, but remained among the strongest over this period. New export orders also posted a further robust expansion.
In line with a sustained rise in new business, Indian service providers raised their workforce numbers in May. Employment rose at a slight rate that was nonetheless the fastest this year so far.
On the price front, input prices increased at the fastest pace in five months, linked to higher food, transportation and wage costs. As a result, the rate of charge inflation quickened to the joint-strongest in close to six years.
Service firms remained optimistic about business activity over the next twelve months on the back of strong demand, favorable market conditions, and fruitful advertising.
"With policymakers closely monitoring inflation developments, long-waited cuts to interest rates - which could aid business strategies, budgeting and investment plans - appear more distant," Pollyanna De Lima, economics associate director at S&P Global Market Intelligence, said.
