“May data pointed to a marked increase in Indian service sector activity, as signalled by a rise in the headline HSBC Business Activity Index from 52.8 in April to a three-month high of 54.7,” the survey showed.“Meanwhile, manufacturing PMI data showed factory output rising at a strong rate in the latest survey period. Consequently, the HSBC Composite Output Index (covering manufacturing and services) posted 55.3 in May, up from 53.8 in the previous month.” Official data released last month showed the India’s economic growth had slowed to a nine-year low of 5.3% in the January-March quarter. Overall GDP growth slowed to 6.5% in 2011-12 compared to 8.4% in the previous year, prompting experts to call for immediate action to reverse slowing growth.
A more worrying sign was the slowdown in the service sector, which accounts for nearly 60% of GDP, but the May PMI data, which is seen as an advance indicator, should help lift the mood. The survey said the May data pointed to an increase in the volume of work-in-hand (but not yet completed) at Indian service providers’ units. Input price inflation in the service sector accelerated to a strong rate amid reports of higher prices paid for energy, fuel and raw materials.