Services Growth Hits 6-month Low In May

Posted By: Religare
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Services activity in India softened for the second straight month, expanding at the slowest clip since November, in May 2016 amidst sluggish demand, reflecting renewed sluggishness in Asia's third biggest economy, bolstering the case for a further interest rate cut by the Reserve Bank of India (RBI) in the near-term.

Services Growth Hits 6-month Low In May
The gauge measuring services activity in India fell to 51 in May from 53.7 in April, but remained above the neutral 50-mark, Markit Economics reported on Friday.

New business in the Indian services sector grew at the slowest pace since July amidst increased competition and the assembly elections in some regions, leading to only marginal job growth.

Input costs rose again, leading to a further increase in prices charged, but the rate of inflation eased. Meanwhile, the degree of optimism among services providers was the lowest since February.

A combined gauge of manufacturing and services fell to a six-month low of 50.9 in May, from 52.8 in April.

"Ongoing weakness in manufacturing and services was evident in May, with output growth losing momentum for a second straight month. Overall expansion across the two sectors was the lowest since last November, as was the case for new orders", Markit Economics said.

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