New Delhi, June 3: According to data released by HSBC India Services PMI, the service sector in India experienced significant growth in May, driven by rising demand in freight, digital services, e-commerce, entertainment, and IT services. The Purchasing Managers’ Index (PMI) for the sector climbed to 59.8, up from 58.8 in April.
As new orders increased, companies accelerated their business activities. Additionally, service sector firms continued to expand their workforce, leading to a rise in employment opportunities.
The PMI report indicates that while cost pressures in India’s service sector remain historically high, there was a decline in these pressures in May, reaching the lowest level in the past four months. This allowed companies to implement only limited price increases for their services, with the rate of price hikes in May being the slowest since January.
Pranjul Bhandari, Chief India Economist at HSBC, noted that business activity in India’s service sector continued to expand in May, supported by a consistent rise in new business. She also highlighted a rebound in external demand for services provided by India, following a decline in April.
Bhandari stated that reduced inflation in input costs has alleviated the pressure on companies to raise prices. The first quarter of the fiscal year saw the fastest growth in new orders for Indian service providers in the last six months, recovering from the slowdown observed in March.
Indian service companies received more orders from foreign markets, although the growth in international orders was slightly lower compared to total sales and below the average levels of 2025. Nonetheless, foreign demand remained robust, with companies reporting increased business from Australia, Canada, France, Germany, Hong Kong, Malaysia, the UAE, and the UK.
Despite the rise in service prices, demand for Indian services remained strong. However, the rate of fee increases fell to a four-month low, aligning closely with long-term averages.
In May, Indian service sector companies continued to increase their workforce, with job creation maintaining a strong pace, marking the second-fastest growth in nearly a year, surpassed only by April’s performance. However, less than 7% of surveyed companies reported increasing their hiring, while most maintained their current staffing levels.
Leave a Comment