Services see contraction in July when compared to June

3 Aug 2022 , 03:09 PM

After reaching a record high in June of almost 11 years, India’s services sector fell to a four-month low in July. In the month of July, the S&P Global India Services Purchasing Managers’ Index (PMI) fell from 59.2 to 55.5. However, it is clear that activity increased because a reading above 50 denotes expansion in activity while a print below 50 denotes contraction.

According to Pollyanna De Lima, assistant director of economics at S&P Global Market Intelligence, “there was…a clear loss of momentum for the Indian service economy as demand was considerably restricted by competitive pressures, rising inflation and unfavorable weather.

High pricing was another factor causing issues for the business. Despite being the smallest increase in five months, input prices increased significantly once more. To compensate, businesses had to raise their service fees for the 17th month of July. The rate of growth was once again slower than in June.

The services PMI fell as a result of the bad weather and rising costs, while the new business grew at the weakest rate in four months. As a result, the number of positions in the service sector hardly increased in July, and the majority of service firms reported relatively minor capacity problems.

The manufacturing PMI increased to an eight-month high of 56.4 in July, according to statistics released on August 1. As with the services PMI, the composite PMI also decreased to a four-month low of 56.6 in July from 58.2 in June. June had the lowest manufacturing index in nine months at 53.9.