Services PMI rises to 59.8 in May as demand, output growth pick up

The Services PMI rose to 59.8 in May from 58.8 in April, signalling the fastest expansion since November as firms reported stronger demand and softer price pressure

Growth in India’s services sector activity rose to a six-month high in May as demand remained resilient, according to data compiled by S&P Global on Wednesday.

 

The HSBC India Services Purchasing Managers’ index (PMI) rose to 59.8 in May from 58.8 in April. The May reading was the highest since November 2025, when it was also 59.8.

 

“Strengthening demand for services such as freight, digital solutions, e-commerce, entertainment and IT reportedly boosted new business growth during May. As a result, companies lifted activity to a greater extent and continued to add to payroll numbers,” said the survey.

 

The reading for March remained above the 50-mark, which indicates expansion in activity, while a reading below 50 signifies contraction. The headline figure has been in the expansion zone for the 58th month running.

 

 

Recovery in the services sector mirrored the manufacturing sector, which also rose to a three-month high of 55 in May from 54.7 in April.

 

The HSBC India Composite PMI Output Index, which is a weighted average of the Manufacturing Output Index and the Services Business Activity Index, also rose to a six-month high of 59.3 in May from 58.2 in April.

 

Panel members said healthy demand conditions, new client wins and ongoing improvements in new business intakes boosted output growth.

 

New orders placed with Indian service providers rose to the highest in six months. However, exports remained muted.

 

While cost pressures receded to the lowest in four months, they remained historically high across the service economy. “Survey participants reported having paid more for food, fuel, gas, labour, and materials compared to April,” the survey said.

 

The increase in selling prices remained moderate and rose to the lowest since January, with only 5 per cent of firms hiking their fees.

 

“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,” Pranjul Bhandari, chief India economist at HSBC, said.

 

There was further job creation in May by Indian service providers. “The overall rate of job creation was solid and the second-fastest in just under a year. But fewer than seven per cent of panellists signalled greater hiring and the vast majority indicated no change in headcounts,” the survey said.

 

The sub-category of consumer services continued to lead the expansion in new business intakes and output, compared to the other categories.

 

The four major segments tracked are consumer services, finance & insurance, real estate & business services and transport, information & communication.

 

“Consumer services also topped the inflation rankings, recording the strongest increase in both input costs and output charges out of all four monitored sub-sectors,” said the survey.