May services growth halved to under 10%, data suggests, Pg9

Key Highlights:

• India's services sector growth reportedly halved to approximately 9.5% in May from 20.5% in April, as per the experimental Index of Services Production (ISP).
• The Ministry of Statistics and Programme Implementation (MoSPI) released this new index, which uses 2024-25 as its base year.
• The ISP measures the performance of 19 services sub-sectors, addressing a long-standing gap in official monthly statistics.
• The 'accommodation and food' category led growth at 27.4% in May, though most sub-sectors experienced slower growth compared to April.

Detailed Insights:

• The ISP serves as the services counterpart to the Index of Industrial Production (IIP), which tracks industrial output.
• Despite the slowdown, May's services growth of 9.5% was nearly double the 5% expansion recorded by the industry sector.
• Only railway transport and air transport sub-sectors showed improved year-on-year performance in May compared to April.
• IT and computer-related services, holding the highest weight in the ISP (22.47%), saw its growth decline to 10.3% in May.
• The services sector contributes over half of India's Gross Domestic Product (GDP), making its timely monthly measurement crucial.
• Previously, S&P Global’s services Purchasing Managers’ Index (PMI) was the primary monthly indicator for the sector.

Key Concepts Involved:

• Index of Services Production (ISP): An experimental monthly index by MoSPI measuring the output performance of India's services sub-sectors.
• Ministry of Statistics and Programme Implementation (MoSPI): The central government agency responsible for statistical activities and program implementation in India.
• Index of Industrial Production (IIP): A composite indicator that measures the growth rate of various industrial sectors in the Indian economy.
• Purchasing Managers’ Index (PMI): An economic indicator derived from monthly surveys of private sector companies, reflecting business conditions.