India’s private businesses grew faster in May than they have in over a year, thanks mostly to a big increase in services, a recent survey showed. This happened even though prices were going up.
According to HSBC and S&P Global, the Purchasing Managers’ Index (PMI) — a number that shows how well businesses are doing — went up to 61.2 in May from 59.7 in April. A number above 50 means businesses are growing, and this was the fastest growth since April last year.
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The services sector was the main reason for this growth. The services PMI jumped to a 14-month high of 61.2 from 58.7. Manufacturing also stayed strong with a steady score of 58.3. Both domestic and international demand for services increased a lot.
New orders for private businesses rose at the fastest rate since last April, and exports reached a one-year high. Businesses feel positive about the future and expect demand to stay strong, so they are hiring more people to keep up with work. The number of jobs created is the highest since the survey began in 2005.
However, the survey also showed that costs are rising. The prices businesses pay for materials and goods increased the most in five months. The prices businesses charge customers also rose at the fastest rate since last November. Manufacturing prices increased sharply, but companies could raise their prices because demand was strong.
These rising costs might make retail prices go up in the next few months. This is a concern because inflation had recently slowed down to a low point, below the Reserve Bank of India’s 4% target for the third month in a row.
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Because of this, the Reserve Bank of India is expected to lower interest rates again in June to 5.75% to help the economy grow.
