India Services Boom
India's Services Sector Growth Accelerates to Six-Month High, Driven by Domestic Demand
India’s services sector accelerated in May to its fastest pace in six months, with the HSBC India Services PMI rising to 59.8 from 58.8 as domestic demand and new orders picked up. The surge in new business was the strongest driver, supported by areas such as e-commerce, entertainment, and IT, while export demand improved modestly after weakness in April. At the same time, price pressure eased as input cost inflation slowed to a four-month low, allowing firms to raise selling prices at the weakest pace since January. Hiring continued but remained limited and did not point to broad-based job creation across the sector. However, business confidence slipped for a second straight month, and the business outlook index fell below its historical average even as the broader private economy also strengthened, with the composite PMI increasing to 59.3. Overall, the data suggest India’s services growth is increasingly powered by domestic demand even as firms remain cautious about the global environment.
Key Points
HSBC said the May Services PMI reading of 59.8 was “comfortably above” the preliminary estimate of 58.9, marking the sector’s strongest expansion pace since November 2025 and extending the growth streak to “nearly four years.”
On exports, the survey reported modest international-order gains after April’s weakness, with a specific note that uncertainty was tied to “a U.S. still pending / trade deal still pending” in some reporting—while firms cited improved demand across markets including Australia, Canada, France, Germany, Hong Kong, Malaysia, the UAE, and the UK.
Hiring remained a drag on labor-market breadth: one report said “fewer than 7% of firms surveyed noted new recruitment,” implying the headline expansion was not translating into broad-based job creation.
The reporting emphasized the macro importance of the services rebound, noting that services “contributes more than half of India’s gross domestic product,” making the PMI-driven lift a key part of how policymakers sustain overall growth.
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