India’s services sector expanded at its fastest pace in six months in May. The HSBC India Services PMI rising to 59.8 from 58.8 in April amid stronger demand and higher new business inflows.
The HSBC India Composite PMI Output Index, which tracks both manufacturing and services activity, also rose to 59.3 in May from 58.2 in April, signalling broad-based strength in private sector activity.
A reading above 50 indicates expansion in the PMI data.
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The HSBC India PMI report noted that demand for services such as freight, digital solutions, e-commerce, entertainment and information technology supported business activity during the month. Companies also reported healthy demand conditions, new client wins and stronger order inflows.
Here are the key highlights from the report.
New orders rise sharply
New business received by Indian service providers increased at the fastest pace in six months during May, moving further away from the slowdown seen in March.
Export demand also improved after weakening in April. Firms reported new business from markets including Australia, Canada, France, Germany, Hong Kong, Malaysia, the UAE and the UK. However, growth in overseas orders remained below the average levels recorded in 2025.
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“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.
Cost pressures moderate
The survey showed that input cost inflation eased to a four-month low in May, although companies continued to face higher expenses for food, fuel, gas, labour and materials.
With cost pressures moderating, the increase in prices charged by service providers also softened. Charge inflation eased to a four-month low and was the weakest since January. Only a small proportion of firms raised prices, mainly to pass on higher costs to customers.
Hiring remains strong
Services firms continued to add workers in May as business activity expanded. Employment growth remained solid and was the second-fastest recorded in nearly a year.
Companies also remained optimistic about business prospects over the next 12 months, expecting favourable demand conditions to support growth. However, overall confidence slipped to a three-month low and stayed below its long-run average.
Private sector activity strengthens
The survey also showed stronger growth across the broader private sector. The HSBC India Composite PMI Output Index, which combines manufacturing and services activity, rose to 59.3 in May from 58.2 in April.
Both manufacturing and services firms reported faster growth in output and sales, while new orders across the private sector increased at the strongest pace in six months.
At the same time, selling price inflation across the private sector eased to its lowest level since January, indicating that stronger demand did not lead to a sharp rise in pricing pressures.
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