India’s services PMI recorded its strongest growth in six months during May, driven by robust domestic demand, rising business activity, and sustained job creation, according to the latest HSBC India Services Purchasing Managers’ Index (PMI) survey compiled by S&P Global.

The HSBC India Services PMI rose to 59.8 in May from 58.8 in April, marking the highest reading since November 2025. A PMI reading above 50 indicates expansion, while a figure below 50 signals contraction, underscoring the continued strength of India’s services economy.

Key Highlights

• India’s services PMI rose to 59.8 in May, highest level since November 2025.
• Strong domestic demand, rising orders and hiring drove faster services sector expansion.

Strong Demand Boosts Business Activity and Employment

The latest survey highlighted healthy demand conditions, increased client acquisitions, and rising business volumes across key sectors. Service providers reported strong growth in industries such as freight, digital solutions, e-commerce, information technology, and entertainment, which contributed significantly to the expansion in new business and output.

According to the survey, strengthening demand across these sectors helped companies increase activity levels and continue expanding their workforce. New business orders grew at the fastest pace in three months, supporting the overall acceleration in services activity.

Export demand also remained positive during May, although growth in international orders lagged behind domestic sales and remained below the average pace recorded so far in 2025. Nevertheless, overseas demand continued to contribute to overall business growth.

Employment generation remained a bright spot for the sector, with firms increasing hiring at the second-fastest rate in nearly a year. Companies cited the need for additional staff to manage growing workloads and support expanding operations as demand remained strong.

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Cost Pressures Ease Despite Rising Input Expenses

On the inflation front, service providers continued to face elevated operating costs due to higher spending on food, fuel, gas, labor, and raw materials. However, the pace of input cost inflation slowed to a four-month low, offering some relief to businesses.

With cost pressures moderating, companies raised their selling prices at a slower pace. Output charge inflation eased to its lowest level since January, suggesting that businesses are becoming more cautious in passing higher costs on to customers.

The final PMI reading of 59.8 was also revised upward from the preliminary estimate of 58.9, indicating that the sector’s performance was stronger than initially expected.

Despite the robust expansion, business confidence softened during the month. Service providers reported a decline in optimism to a three-month low, with sentiment remaining below the long-term average. The moderation in confidence reflects lingering concerns over global economic uncertainties and cost pressures.

However, firms largely remain optimistic about future growth prospects, supported by expectations of sustained domestic demand, continued economic activity, and favorable business conditions.

The latest PMI data reinforces the services sector’s critical role in driving India’s economic growth. Strong consumer demand, expanding business activity, and steady employment growth continue to support the sector, helping it navigate inflationary pressures and global headwinds while maintaining a solid growth trajectory.