Business Desk. The growth rate of the Indian services sector has slowed as compared to June due to high inflation and global factors. S&P Global India Services PMI declined to 55.5 in July 2022 from 59.2 in June. This is the lowest growth in the services sector since March. Weak sales and inflationary pressures restricted business activity, reducing PMI.
It is a matter of relief that even now the index is above 50 points. A Purchasing Managers Index (PMI) above 50 indicates expansion, while a score below 50 indicates weakness. On a longer scale, the July readings are projected to be above average. Domestic demand picked up despite falling below an 11-year high in June. Poliana de Lima, associate director of economics at S&P Global Markets, said the latest results had many positives. Business activity remained strong due to the establishment of new businesses, new service offerings, and innovative marketing practices. Like many other countries, India is also battling rising inflation. Prices of many commodities remained at a decade high. Due to the depreciation of the rupee, inflation has increased further.
Why the growth rate of services declined
According to the survey, service providers who reported higher sales in July turned on the demand side, but fierce competition and unfavorable weather slowed the growth of services. The survey said that the domestic market continues to be a major source of sales as international demand for Indian services has already declined. Meanwhile, business sentiment in the services economy remained weak in July as only 5 percent of companies have forecast production growth in the coming year. Most of the firms (94 percent) believe that there will be no change in business activities in the coming days. On the price front, the average spending of service providers increased during July. On the jobs front, the July data showed a negligible growth in service sector employment across India. The rate of job creation was almost the same as in June.
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