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India’s services sector output increased at second-fastest pace in close to 13 years in the month of May, supported by sustained growth of new business in the face of positive demand trends, despite falling from April reading. As per the survey report, the seasonally adjusted S&P Global India Services PMI Business Activity Index stood at 61.2 in May from 62.0 in April. Further, the S&P Global India Composite PMI Output Index -- which measures both manufacturing and services -- stood at 61.6 in May, remaining unchanged from April reading. 

The survey report further noted that demand strength underpinned another monthly increase in new business at service providers. The rate of expansion softened from April's near 13-year high, but was among the strongest over this period. Beside, external demand for Indian services continued to improve in May, highlighted by a fourth successive rise in new export business. Moreover, the pace of expansion was solid and the quickest in the calendar year-to-date.

On the inflation front, input prices rose at a marked rate that was the fastest since last December and above its long-run average, on the back of higher food, input, transportation and wage costs in May. Amid rising cost burdens, firms charged more for their services in May. Having quickened to the joint-strongest in close to six years, the rate of charge inflation was solid.

Meanwhile, services companies maintained an upbeat view that business activity would increase over the coming 12 months. Advertising, demand strength and favourable market conditions were among the reasons cited for optimistic forecasts. However, the overall level of confidence fell slightly from April, amid some concerns around competitive pressures.