Purchasing Managers Index (Services)
The Services Purchasing Managers Index (PMI Services) is a monthly survey-based diffusion index compiled by S&P Global (formerly IHS Markit) that measures business conditions in India's services sector, with readings above 50 indicating expansion and below 50 indicating contraction.
The PMI Services survey collects responses from purchasing managers at approximately 400 service sector companies across India, covering five sub-sectors: financial services, consumer services, transport, information technology, and communications. Respondents indicate whether conditions for several variables—new business, business activity, outstanding business, employment, and input prices—are better, the same, or worse than the previous month. The diffusion index is constructed as a weighted sum of the percentage reporting improvement plus half the percentage reporting no change.
India has consistently reported among the strongest Services PMI readings globally. For much of 2023–2024, India's Services PMI remained above 58–60, reflecting robust demand in IT services, financial services, and consumer-facing businesses. This was in sharp contrast to the manufacturing PMI, which is more sensitive to global trade conditions and commodity cycles.
The Composite PMI—a weighted combination of the Manufacturing PMI and Services PMI—is the most watched headline number for overall private sector health. The services PMI typically drives the composite reading in India, given the large weight of services in the economy. A composite PMI above 55 for several consecutive months is broadly consistent with GDP growth in the 6–7% range.
The new orders sub-index within Services PMI is the forward-looking component to watch. Strong new orders indicate pipeline activity that will translate into revenue and employment in coming months. The input cost and output price sub-indices within the PMI provide early inflation signals—rising input costs, if not passed on to customers (i.e., if output prices remain stable), compress corporate margins.
For equity investors, the Services PMI is most directly relevant to IT services, logistics, hospitality, and BFSI stocks. An accelerating Services PMI trend supports a constructive view on these sectors' earnings trajectory.