IGI Logo

India’s service sector activity expanded in the month of May at strongest rate in over 11 years even after input cost inflation climbs to new record. The upturn was supported by a substantial pick-up in new business growth as demand continued to recover following the reopening of the economy after COVID-19 lockdowns.

As per the survey report, the seasonally adjusted S&P Global India Services PMI Business Activity Index surged to 58.9 in May from 57.9 in April. Further, the S&P Global India Composite PMI Output Index -- which measures both manufacturing and services -- also improved to 58.3 in May from 57.6 in April.

On the inflation front, the rate of inflation climbed to the highest in 16-and-a-half years of data collection. Services companies continued to transfer rising cost burdens through to customers via upward adjustments to selling prices. Little-changed from April, the overall rate of charge inflation was the second-highest in close to five years.

The report further noted that despite remaining optimistic towards the 12-month outlook for business activity, firms remained concerned that inflationary pressures would dampen the economic recovery. The overall level of positive sentiment improved from April, but remained historically low.