India’s services sector maintained its growth momentum in May as new business intakes and output rose amid a demand push, particularly in the domestic market, a private survey showed on Wednesday.
The HSBC India Services Purchasing Managers’ Index (PMI), compiled by S&P Global, rose to 59.8 in May from 58.8 in April. It has continued to grow since April, after registering its weakest growth in 14 months in March. Growth in May was the strongest since last November.
Despite monthly swings, the index has remained above the 50-point threshold, which separates contraction from expansion, for more than four years, highlighting the sector’s resilience to headwinds.
Input costs receded to their lowest in four months and selling prices rose at a more measured pace with firms staying optimistic about future prospects, the survey noted. The data showed input costs receded even though cost pressures remained historically high across India’s services economy. A great degree of cost absorption was highlighted by a relatively moderate rise in output charges, the softest since January, the survey said.
Output growth in May was boosted by healthy demand conditions, new client wins and ongoing improvements in new business intakes, it added. New orders placed with Indian service providers rose to the greatest degree in six months halfway through the first fiscal quarter, moving further away from the slowdown in March, it added. New export business also rose, albeit to a lesser extent than total sales and the average recorded during calendar year 2025.
The expansion in international orders was nevertheless solid, with firms citing gains from Australia, Canada, France, Germany, Hong Kong, Malaysia, the UAE and the UK, the survey said.
“India’s services PMI signalled an expansion in business activity in May, supported by a continued rise in new business. External demand for India-provided services also grew at a faster pace, rebounding after a sharp decline in April. Input cost inflation eased, which in turn reduced pressure on selling prices,” said Pranjul Bhandari, chief India economist at HSBC.
Demand for Indian services improved despite another increase in selling prices. The rate of charge inflation eased to a four-month low, however, and broadly matched its long-run average. Firms that hiked their fees (only 5% of panellists) remarked on the pass-through of rising expenses to clients, said the survey.
On the employment front, the survey said that Indian services companies signalled a further increase in payroll numbers. The overall rate of job creation was solid and the second-fastest in just under a year (behind April), but fewer than 7% of panellists signalled greater hiring and the vast majority indicated no change in head counts, it said.
Regarding the 12-month outlook for business activity, services firms collectively expressed optimism, the survey said adding that the firms generally expect demand conditions to remain favourable and therefore support output. That said, the overall level of confidence slipped to a three-month low and was below the historical trend, the survey noted.
Granular data showed that consumer services remained the brightest spot, as growth of new business intakes and output here outpaced those seen in the other three categories. Consumer services also topped the inflation rankings, recording the strongest increases in both input costs and output charges out of all four monitored sub-sectors.
Composite PMI
According to HSBC India Composite PMI, which was also released on Wednesday, May saw quicker increases in Indian private sector sales and output, with growth rates quickening at manufacturing firms and their services counterparts.
The HSBC India Composite PMI Output Index continued to recover from March’s slowdown, rising from 58.2 in April to 59.3 in May.
As was the case with business activity, new orders placed with private sector companies rose at the quickest pace in six months. Service providers outperformed manufacturers, though growth accelerated in both cases, the survey said.
The rate of input cost inflation also eased, but remained above both that of selling charges and its historical average. Rates of increase in input costs and output charges were higher in manufacturing than in services, the survey noted.
The HSBC India Services PMI draws on responses from roughly 400 companies across sectors such as consumer services (excluding retail), transport, information and communication, finance, insurance, real estate, and business services.