India services sector growth falls to three-month low in June
Global Market Intelligence. "This bullish pick-up in growth momentum supported a further sharp upturn in business activity and encouraged another uplift in employment figures, boding well to near-term growth prospects," she added. India's services sector, one of the fastest growing in the world, contributes to over 50% of the country's GDP.
However, although input costs continued to increase in June, the overall rate of inflation has softened since May and broadly converged towards its long-run average, S&P said in the survey. "Services companies noted another increase in outstanding business volumes during June. Although moderate, the pace of accumulation quickened to a five-month high," it added.
According to government data, India's GDP growth accelerated to 6.1% in the January to March 2023 quarter, pushing the annual growth (for FY23) to 7.2% from 7% estimated earlier. "Service providers experienced a retreat in cost pressures, although business expenses rose again amid higher food and wage costs," said De Lima. "Charge inflation showed some signs of stickiness, picking up only slightly from May but nevertheless reaching a near six-year high," she said, adding that combined with manufacturing, output prices across the private sector increased at the sharpest pace in over a decade.
Meanwhile, as per data released Monday, India's manufacturing PMI for manufacturing fell to 57.8 in June from 58.7 in May. On Wednesday, S&P Global's Pollyanna De Lima said that the latest PMI results for output charges coupled with upside risks to food prices suggest that interest rates are highly unlikely to be reduced as 2023 progresses. The Reserve Bank of India has raised repo rates by 250 basis points (bps) since May 2022 to tame
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