India's services PMI falls to 58.5 in June, lowest in three months

The growth in India's services sector declined in June owing to inflation, a private survey showed on Wednesday.

The headline figure in the Purchasing Managers' Index (PMI) survey by credit rating agency S&P Global declined to 58.5 in June from 61.2 in May. This is the lowest level since April when it was 62.

"Charge inflation showed some signs of stickiness, picking up only slightly from May but nevertheless reaching a near six-year high. Combined with manufacturing, output prices across the private sector increased at the sharpest pace in over a decade," said Pollyanna De Lima, Economics associate director at S&P Global Market Intelligence.

Service providers noted a sharp and quicker expansion in intakes of new business at the end of the first fiscal quarter. Positive demand trends, advertising, and favourable market conditions were among the reasons cited by survey participants for the latest upturn in sales.

"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," De Lima added.

Earlier this week, S&P Global also released the manufacturing PMI for June which fell to 57.8 from 58.7 in May.

It said that manufacturers lifted their selling prices in June. The rate of charge inflation was marked, the strongest in 13 months and above its long-run average. In certain cases, the upturn was attributed to higher labour and input costs.