India's Service Sector Growth In May Slips To 1-Year Low

India's service sector growth slowed down to its lowest level in a year in the month of May, due to disruptions from general elections, a private survey said. On Wednesday, results of the Nikkei India Services Business Activity Index fell to 50.2 for May, from 51.0 in April.

Despite the slowdown, the service sector PMI (Purchasing Managers' Index) remained in the expansion territory for the 12th straight month. Above 50 means expansion while a score below that means contraction.

"India's dominant service economy again suffered the impacts of election disruptions, with growth of both new work and business activity softening for the third straight month," said Pollyanna De Lima, Principal Economist at IHS Markit, and author of the report.

The report also said the slowdown may be temporary considering the pick-up in hiring activity and improved confidence among companies on their future prospects.

Meanwhile, the Nikkei India Composite PMI Output Index, that maps both the manufacturing and services industry, was at 51.7 in May, unchanged from April.

Earlier this week, the manufacturing sector activity for May showed an increase to 52.7 in May, as against the previous month's 51.8.

The data comes ahead of the announcement of the Reserve Bank of India's (RBI) monetary policy review decision on Thursday.