Global Services Sector Shows Diverse Trends in May
India's services sector experienced a slowdown in growth in May, reaching a five-month low due to intense competition, price pressures, and a severe heatwave, according to the HSBC India Services Business Activity Index. The index dropped to 60.2 from 60.8 in April, marking the lowest level since December. Despite the slowdown, new orders from international markets grew at the fastest pace in a decade, while domestic orders slightly decreased but remained strong. Business confidence rose to its highest level in eight months, and job creation reached a 21-month high.
In contrast, China's services sector saw accelerated growth in May, achieving a ten-month high. The Caixin Services Purchasing Managers' Index rose to 54.0 from 52.5 in April, driven by robust new business inflows. This marked the sector's seventeenth consecutive month of expansion. However, the official survey indicated a contraction in the manufacturing sector and a slowdown in services activity growth. Export business growth was particularly strong, with input costs continuing to rise, contributing to inflation.
The US services sector also showed significant improvement in May, reversing the decline seen in April. The Institute for Supply Management (ISM) reported that the ISM Services PMI increased to 53.8% from 51.4%, surpassing expectations. The Business Activity subindex rose sharply to 61.2%, while the New Orders subindex continued to expand for the seventeenth consecutive month. Despite these gains, employment remained in contraction, although at a slower pace compared to April.
Meanwhile, the UK private sector economy expanded faster than anticipated in May, as indicated by the S&P Global and Chartered Institute of Procurement and Supply's final composite PMI. The index slipped to 53 from 54.1 in April but remained above analysts' expectations and was revised upwards from an initial estimate of 52.8. This suggests that the UK economy is likely to continue its expansion into the second quarter, following a 0.6% growth in the first quarter of the year.
