PMI: India's services exports bump may lose steam amid global economic gloom
Business momentum in India's services sector was steady in May. The seasonally adjusted HSBC India Services PMI Business Activity Index rose to 58.8 last month from 58.7 in April. A reading above 50 indicates expansion.
The key highlight of the survey was the solid growth in exports of services. The New Exports Orders sub-index rose to 57.6 in May from 55.4 in April. Survey participants reported one of the strongest improvements in international demand in 19-and-a-half years of data collection.
Also Read | India services activity hits three-month high in May on strong export growth; employment rises by record
For manufacturers as well, new export orders rose in May at one of the strongest rates recorded in three years. Panel members remarked on favourable demand from Asia, Europe, the Middle East and the US. But here's a catch.
'In H1 2025, Asian economies have been whipsawed by Trump tariffs; growth and inflation have moderated, even as export frontloading has provided some offset," Nomura Global Markets Research said in a report dated 2 June.
According to Nomura, disinflationary forces are likely to permeate across Asia, and, unlike past export downturns, this is likely to be compounded by Asian currency strength against the US dollar. Thus, Asian central banks will likely continue to decouple from the US Federal Reserve and deliver more policy easing.
In its meeting this week, the Reserve Bank of India is widely expected to cut repo rates by another 25 basis points (bps) to 5.75%. So far, the central bank has cut rates by 50 bps to boost growth amid easing inflation.
Relatively immune
The Indian economy is more domestically driven, with consumption seen as the mainstay for growth. This makes India relatively immune to global trade shocks than Asian peers, but the problem is that consumption demand, especially urban, has been languishing lately.
Companies are struggling with subdued revenue and profit growth, household incomes are muted and latest high-frequency data such as automobile sales is uninspiring.
Also Read | India's exports face geopolitical woes but trade deals offer relief: RBI report
Meanwhile, business confidence of Indian service providers measured via the Future Output Index recovered to 60.4 in May from April's 23-month low of 59.7. Expanded workforces, larger client bases and ongoing marketing initiatives make service providers hopeful.
According to Gaura Sengupta, economist at IDFC First Bank, India's services export growth outperformed merchandise export growth in FY25 also, growing in double-digits. While this outperformance is likely to continue in FY26, she said some moderation in services export growth is likely with the US economy expected to slow down. That said, the manufacturing sector will be impacted more by the tariff tensions and the global growth slowdown.
Also Read | Services boost India's exports to an all-time high of $824.9 billion in FY25
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Indian Express
an hour ago
- Indian Express
PM has put country on path of long-term growth, says Ashwani Vaishnaw
The BJP on Wednesday highlighted the 'transformation in the lives of an average Indian citizen' as well as the strides in both the country's economy and its standing in the global order in the last 11 years of the Narendra Modi-led NDA government at the Centre. Union Minister Ashwani Vaishnaw gave a presentation on the 11 years of 'seva (service)', 'sushashan (good governance)' and 'gareeb kalyan (welfare of the poor)' under PM Modi's leadership. He said 'humongous tasks' had been fulfilled under the Prime Minister's leadership to put the country on the path of 'long-term growth'. Union Home Minister Amit Shah, Defence Minister Rajnath Singh, BJP national president Jagat Prakash Nadda, Finance Minister Nirmala Sitharaman, Road Transport and Highways Minister Nitin Gadkari besides national spokespersons and senior party leaders attended the event organised at Bharat Mandapam in the presence of senior editors and journalists from the print media. The presentation focussed on statistics related to 12 'big picture' achievements in each sector ranging from the welfare of the poor and the marginalised to the welfare of farmers and women's empowerment, ease of living for the middle class, infrastructure development, affordable healthcare and enhancement of India's per capita income from a little over `86,000 to `2 lakh, among others. In addition to this, the Union Minister also sought to underscore the changes in the very 'vision' of governance undertaken by PM Modi since taking over in 2014 with the welfare of both the nation and its citizens at their core. 'Earlier, there was competition among districts when it came to being declared 'backward', but PM Modi's vision is different; these became not backward but aspirational districts… Under his government, the economy of the very country which enslaved us for 150 years has been surpassed… 'Defence agents', once common in Delhi's corridors, are now a thing of the past,' Vaishnaw said. 'Instead of breaking the back of Naxalism, earlier governments used to only acknowledge its presence across what was called the 'Red Corridor'… Article 370 was treated as a given, something that nothing could be done about, but not any more… No other Prime Minister before him made an announcement as crucial to the welfare of our girl children as the provision of sanitary pads at `1, (a promise) made from the Red Fort,' he said. Vaishnaw also underlined India's stature as a global leader when it came to the indigenous Unified Payments Interface (UPI), through which digital transactions of an estimated `214 lakh crore had been done till January during the 2024-25. Jatin Anand is an Assistant Editor with The Indian Express. Over the last 15 years, he has covered bureaucracy & politics, crime, traffic & intelligence, the Election Commission of India & Urban Development among other beats. He is an English (Literature) graduate from Zakir Husain Delhi College, DU & specialised in Print at the Asian College of Journalism (ACJ), Chennai. He tweets @jatinpaul ... Read More
India Today
an hour ago
- India Today
Elon Musk spoke to Trump before apologising over social media feud: Report
Elon Musk privately called President Donald Trump on Monday before posting a message on X saying he regretted some of his social media comments, according to a White House source cited by apology, posted on X (formerly Twitter) on Wednesday, read: "I regret some of my posts about President @realDonaldTrump last week. They went too far." Trump later called the gesture "very nice," signalling a possible thaw in their public feud. advertisementAccording to the New York Times that the apology came after Musk spoke privately with Vice President JD Vance and White House chief of staff Susie Wiles on Friday. The talks aimed to find a way to calm tensions between the two men, who had been engaged over a social media FEUD FOLLOWED BY A SOFTENING OF TONE The feud began last Thursday when Musk lashed out at Trump's Big Beautiful Bill. Trump responded by downplaying Musk's role in his political success. The argument quickly escalated after Musk even tried to link Trump to convicted sex offender Jeffrey the next few days, Musk signalled that he wanted to fix the relationship. After his conversation with Wiles and Vance, he deleted several social media posts, including one that alleged Trump's name was in government files related to Musk's efforts, Trump reportedly told his advisers he was not interested in talking to the billionaire and was "done with him." He repeated the same message in press interviews. However, behind closed doors, teams on both sides were working to bring about a MOVES TO MEND TIES Musk seemed more keep to make peace, despite the fact that both men had a lot on the line. Trump threatened to revoke SpaceX's billion-dollar government contracts. Ahead of the 2026 midterm elections, Musk, who is also one of the biggest donors to the Republican Party, has promised to contribute an additional $100 million to Trump's outside political knowledge of the inner circle of the administration also gives him a great deal of influence. Trump might not want to exclude Musk entirely in order to avoid the issues of his term in the office, where former staffers wrote books on him, revealing some 'critical' InMust Watch
The Print
an hour ago
- The Print
Trump says ‘deal is done', China to remove curbs on exports of critical minerals to US
US Secretary of Commerce Howard Lutnick had earlier late Tuesday evening said that the two sides had agreed to put the 'meat on the bones' on the framework agreed to last month in Geneva to eventually reduce the reciprocal tariffs imposed by Washington DC and Beijing on one another. The deal will also allow Chinese students continued access to elite American universities, following threats from the Trump administration to curb their admissions. New Delhi: US President Donald Trump Wednesday said a 'deal' with China is done and relations between the two largest economies are 'excellent'. This deal will allow for the export of critical minerals from Beijing to Washington DC following two days of intense negotiations between their respective officials in London. The bilateral tariffs imposed on imports to the US from China crossed 100 percent on goods, following Trump's 'reciprocal tariffs' first announced on 2 April. The tit-for-tat trade war had led to both governments agreeing to a framework to reduce tariffs last month. Donald J. Trump Truth Social 06.11.25 08:04 AM EST — Commentary Donald J. Trump Posts From Truth Social (@TrumpDailyPosts) June 11, 2025 However, China continued to impose curbs on the exports of critical minerals and technologies to the US, which led to Washington imposing its own curbs on exports of certain goods such as semiconductors to Beijing. The deal struck in London will see the withdrawal of these curbs in a 'balanced way' according to Lutnick. However, the details of the deal have yet to be made public. Minutes after his first statement, Trump in another post on the social media platform added: 'President XI and I are going to work closely together to open up China to American Trade. This would be a great WIN for both countries!!!' The current round of talks in London came after Trump and the President of China Xi Jinping held a call last week. 'The two sides need to make good use of the economic and trade consultation mechanism already in place, and seek win-win results in the spirit of equality and respect for each other's concerns,' Xi is said to have told Trump during the call, according to the Chinese readout. The 90-minute call between the two leaders last week was the first between the two since Trump returned to the White House in January, reported The New York Times. 'The two sides reached principled agreement on implementing the important consensus reached by the two heads of state during their phone call on June 5 and the framework of measures to consolidate the outcomes of the economic and trade talks in Geneva, and made new progress in addressing each other's economic and trade concerns,' the Chinese readout of the talks in London said, as published by Xinhua. The US delegation consisted of Lutnick, US Trade Representative Jamieson Greer and Treasury Secretary Scott Bessent. China was represented by Vice Premier He Lifeng, who is in charge of economic policy. The deal, if agreed to by both leaders, could see some normalisation in the export of critical minerals from China to the US, which is a key part of the manufacturing of most modern technologies. After Trump's original tariffs on China touched 145 per cent a few months ago, Beijing instituted curbs on the exports of such goods, given its strong hold on the supply of critical minerals and magnets in the global market. The US in retaliation also highlighted a potential ban of Chinese students from studying at American universities. (Edited by Gitanjali Das) Also Read: Trump's flip-flop to China's aggression—What's bringing India and Australia closer
