India’s services sector is growing, stimulating the economy, PMI indicators show

(Bloomberg) — India’s services business rose to a four-month high in May, boosting economic growth, according to a snapshot survey by HSBC Holdings Plc. showed.

The services purchasing managers’ index rose to 61.4 from 60.8 last month, while the industrial purchasing managers’ index fell to 58.4 from 58.8 in April. The composite index jumped to 61.7.

The indexes are based on preliminary survey results, and final data will be released next month. A reading above 50 indicates an increase in economic activity compared to the previous month. The printout below indicates a decline in activity.

“The latest data showed the strength of new export orders for both sectors, which grew at the fastest pace since the series began in September 2014.” Pranjul Bhandari, chief India economist at HSBC, said in a statement. She added that the level of optimism had caused companies to increase staffing levels.

Strong growth in India’s dominant services sector, which accounts for more than 50% of gross domestic product, has been key to creating jobs and supporting growth in the world’s fastest-growing economy.

The Indian economy is expected to grow by over 7% in the current financial year. The rapid expansion will also give the central bank room to focus on containing inflation, which has led economists to push expectations for interest rate cuts to later in the year.

Manufacturing companies continue to see new orders grow faster than their service industry peers, despite seeing a slowdown in growth rates, HSBC said.