Services PMI rises to 58.5 in Jan 2026 as demand and hiring pick up

January services PMI: New orders increased faster in January after slowing at the end of 2025

India’s services sector continued to expand in January, with the HSBC India Services Purchasing Managers’ Index (PMI) rising marginally to 58.5 in January from 58.0 in December 2025, according to the data compiled by S&P Global.

 

The overall growth, driven by buoyant demand, new business gains, and tech investment, remained strong, with the index staying well above the neutral mark of 50 that separates expansion from contraction.

 

Pranjul Bhandari, chief India economist at HSBC, said, "India’s services PMI rose to 58.5 in January, up from 58.0 in December, signalling sustained momentum in the sector. Robust output growth was driven by a steady influx of new orders, including increased international demand from South and Southeast Asia."  

New orders rise in Jan

According to the report, new orders increased faster in January after slowing at the end of 2025. Companies said strong demand and more customer interest helped sales. A better online presence also supported new business. Among services, finance and insurance saw the strongest growth in new orders.

Exports strongest in 3 months

While most new businesses came from the domestic market, export orders also rose at a healthy pace. Companies reported new business from countries such as Indonesia, Kenya, Malaysia, Oman, Qatar, Sri Lanka, Thailand and Vietnam. Export growth was the strongest in three months.

Hiring picks up pace

Service firms started hiring again in January after hiring trends remained subdued in December last year. However, hiring was slow, as most companies felt they already had enough staff. Overall, pending work stayed largely stable, showing no strong pressure to add many new workers, the report said.

Input costs increase

The report noted that companies faced higher costs for items such as eggs, meat, vegetables, electronic goods, paper and spare parts. Input costs rose at the fastest pace since September, but the increase was still moderate compared with past trends.

 

"While input and output prices are rising, they remain fairly mild by historical standards," said Bhandari. Cost pressure was highest in consumer services.

Forward outlook

Business confidence improved to a three-month high after dipping in the latter part of 2025. Firms were positive due to better efficiency, more marketing efforts and new clients. Many expect demand to stay strong in the coming months.

 

Bhandari said, "Business confidence climbed to a three-month high, supported by efficiency gains, effective marketing, and the acquisition of new clients. "

Composite PMI rises to 58.4 in Jan

The HSBC India Composite PMI Output Index rose to 58.4 in January from 57.8 in December, showing strong growth. Both manufacturing and services performed better, helping sales and jobs pick up slightly. Inflation pressures rose but remained mild by historical standards.

 

"The composite PMI also strengthened in January, reflecting solid demand growth across both manufacturing and services," said Bhandari.