Bengaluru, June 3 - India’s services sector recorded its strongest monthly expansion in six months in May, according to the latest HSBC India Services Purchasing Managers' Index (PMI) compiled by S&P Global. The PMI climbed to 59.8 in May from 58.8 in April, exceeding a prior preliminary estimate of 58.9. A reading above 50.0 indicates growth; India’s services PMI has remained above that threshold since mid-2021.
Analysts noted that new business - a primary indicator of demand - rose to its highest point since November 2025. The upswing in new orders was led by gains in e-commerce, entertainment and information technology activity.
Export orders also increased in May, but the improvement was modest. Export demand had fallen to a five-month low in April, and lingering uncertainty related to a pending U.S. trade deal remained a factor cited in the survey.
On the employment front, firms continued to hire, although the pace of recruitment eased slightly. Fewer than 7% of surveyed companies reported taking on additional staff in May, indicating that the overall expansion in activity has not yet translated into broad-based job creation across the services sector.
Price pressures moderated in May. Input cost inflation eased for a second successive month after peaking at a 45-month high in March. Correspondingly, the prices charged sub-index moved down to a four-month low, giving companies some relief on the cost front.
Despite the headline strength, firms expressed somewhat greater caution about the outlook. The business outlook index declined to 61.9 from 62.3 in April - the second consecutive monthly fall - and remained below its historical average, suggesting a more guarded sentiment among service providers.
Combining services with manufacturing, the wider private sector also gained momentum. The Composite PMI rose to 59.3 in May from 58.2 in April, marking its highest reading in six months and reflecting broad private-sector expansion.
Key takeaways:
- Services PMI rose to 59.8 in May, the fastest pace in six months.
- New business reached its highest level since November 2025, driven by e-commerce, entertainment and IT.
- Composite PMI jumped to 59.3, the strongest in six months.
Notable caveats:
- Export orders improved only slightly after an April five-month low, with uncertainty tied to a pending U.S. trade deal.
- Business confidence slipped for a second month, with the outlook index falling to 61.9 from 62.3.
- Recruitment remained limited - under 7% of firms reported new hires - indicating constrained job translation from headline growth.