Services Sector PMI grows at fastest pace in four months; rises to 52.2

New Delhi, June 5 (KNN) The country's services sector activity increased at fastest pace in the past four months in May with rise in new business inflows, according to a Survey.

The Nikkei India Services Purchasing Managers' Index (PMI), which tracks services sector output on a monthly basis, rose from 50.2 in April to 52.2 in May.

The Nikkei India Services PMI posted above the critical 50.0 level, which separates growth from contraction, for the fourth month running in May.

“The headline number was, however, indicative of a moderate pace of growth that was below the series average (54.8),” it said in a release.

A reading over 50 denotes expansion while one less than it indicates contraction in production.

The Nikkei India Composite PMI Output Index also reached a seven-month high of 52.5 in May from 51.3 in April.

The Nikkei Markit India Manufacturing Purchasing Managers’ Index (PMI) had slumped to a three-month low of 51.6 in May.

The data comes just ahead of the second bi-monthly monetary policy on June 6 and 7.

“The pick-up in services sector growth seen mid-way through the first quarter suggests that GDP could expand at a faster rate should growth momentum be maintained in June, though there are downside perils to this,” said Pollyanna De Lima, economist at IHS Markit, and author of the report, adding that concerns over low growth might prompt the RBI to lower the benchmark rate in order to support the economy.

The higher growth in activity was led by more business inflows based on higher demand. Businesses also hired additional staff to meet the orders.

On price rise, the report said, inflation rates were muted which was lower than long-run average.

Lima further noted that "...worries that this period of uninspiring growth may continue for some time might prompt the RBI to lower the benchmark rate in order to support the economy".