Services PMI (India)
India's Services PMI is a monthly survey-based diffusion index compiled by S&P Global (formerly IHS Markit) that gauges business activity across India's service sector, with readings above 50 signalling expansion and below 50 indicating contraction.
The S&P Global India Services PMI is derived from monthly surveys of approximately 400 service-sector companies spanning transport, communications, financial intermediation, business services, personal services, computing and IT, hotels, and restaurants. Respondents compare current month conditions with the prior month across five components: business activity, new orders, employment, input prices, and sentiment about 12-month ahead activity. Each component index is a diffusion index, and the composite headline Services PMI is a weighted average of business activity, new orders, employment, supplier delivery times, and stocks of purchases.
The employment sub-index deserves particular attention because India's service sector — which constitutes over 55 per cent of GDP — is the primary formal employer outside agriculture. When the employment sub-index sustains readings above 50, it indicates net hiring activity, which typically supports urban consumption, credit card spending, and the organised retail sector. Persistent sub-50 employment readings, by contrast, have historically preceded softening in two-wheeler and passenger vehicle sales data.
The input prices sub-index captures cost-push pressures from wages, fuel, and raw materials. Services sector input inflation has often been stickier than manufacturing input costs because wages form a larger share of service firm costs. The RBI's MPC has cited services input prices as a watch variable in its inflation deliberations.
India's Services PMI historically printed higher than most emerging market peers during the post-pandemic recovery phase, with the index staying above 55 for extended stretches. This was partly attributed to the pent-up demand release in hospitality, travel, and entertainment, as well as buoyant IT export revenues.
The Composite PMI Output Index — which blends the Services PMI with the Manufacturing PMI — is often cited by the Finance Ministry and the Prime Minister's Economic Advisory Council as a real-time activity tracker. Market participants typically assess Services PMI in conjunction with GST collections, e-way bill generation, and toll collections to build a more robust picture of economic momentum.