June PMI services rises to 59.2 from 58.8 in May, hits 11-year high

Rising from 58.9 in May to 59.2 in June, the seasonally adjusted S&P Global India Services PMI Business Activity Index was at its highest mark since April 2011 and signalled a steep rate of increase.

The June data pointed to further accelerations in growth of new business and output at Indian services companies amid ongoing improvements in demand conditions. Although firms expect the recovery to be sustained over the coming 12 months, concerns surrounding price pressures restricted business confidence. Input costs continued to rise at a historically elevated pace, although one that was the slowest in three months, while charge inflation hit a near five-year high.

Accorinding to S&PUnrelenting inflation continued to concern businesses, who were cautiously optimistic about the year-ahead outlook for business activity. The overall level of sentiment was well below its long-run average as only 9 per cent of companies forecast output growth.

The 50 mark separates the contraction and expansion of the parameter.

The jump in the services PMI corroborates our view that the services sector will lead the growth recovery in FY2023. Middle-to-high income households are likely to prioritise spending on contact-intensive services, that were avoided during the pandemic, at the cost of consumer durables. This is likely to result in a slower improvement in capacity utilisation levels, modestly delaying the private sectors capex plans amidst the global headwinds and elevated commodity prices”, said Aditi Nayar, Chief Economist, Icra.

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