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Robust Growth in India's Services Sector

New Delhi: The growth of India's services sector remained stable in May, driven by strong demand, new client acquisitions, and increased staffing, according to a recent monthly report.

The seasonally adjusted HSBC India Services PMI Business Activity Index recorded a score of 58.8 in May, slightly up from April's 58.7, indicating a continued robust expansion.

In PMI terminology, a score above 50 signifies growth, while a score below indicates contraction.

"India's services PMI stood at 58.8 in May 2025, reflecting consistent performance in recent months. The rise in international demand has significantly contributed to services activity, as shown by the increase in the new export business index from April," stated Pranjul Bhandari, Chief India Economist at HSBC.

The survey revealed a significant rise in new orders, primarily fueled by advertising, strong demand, and repeat business from existing clients.

Companies noted a near-record surge in international demand for their services in May, with notable increases in new export orders from regions including Asia, Europe, and North America.

"To meet the growing demand, service providers in India ramped up hiring significantly. The employment index reached its highest level ever recorded in this survey," Bhandari added.

Approximately 16% of survey participants reported an increase in payrolls, while only 1% indicated a decrease. "This resulted in the strongest job creation rate in the survey's history," the report highlighted.

The rise in workforce numbers, along with overtime costs, contributed to increased financial pressures on firms. Some companies also reported higher expenses for cooking oil, materials, and meat.

Additionally, price indicators showed a rise in both input costs and output charge inflation, with increases surpassing historical averages.

Business sentiment improved in May, with optimistic forecasts driven by expectations of enhanced staffing capacity, a broader client base, and effective marketing strategies supporting growth in the upcoming year.

The HSBC India Composite PMI Output Index recorded a score of 59.3 in May, only slightly down from April's 59.7, indicating a continued sharp increase in overall activity.

The slight decline in the headline index was attributed to slower growth in factory production, while services activity accelerated.

The ongoing demand for Indian goods and services resulted in record job growth across both sectors, leading to unprecedented overall employment expansion.

The HSBC India Services PMI is compiled by S&P Global based on responses from approximately 400 service sector companies, covering areas such as consumer services (excluding retail), transport, information, communication, finance, insurance, real estate, and business services.