India’s services sector sustained its expansion in May, driven by higher new orders and output, especially from domestic demand, according to a private survey released on Wednesday.
The HSBC India Services Purchasing Managers’ Index, prepared by S&P Global, increased to 59.8 in May from 58.8 in April. The reading marked the strongest growth since November and continued the recovery that began after March’s weakest expansion in 14 months.
The index has stayed above the 50-point mark that divides growth from contraction for more than four years, underscoring the sector’s resilience despite periodic fluctuations.
Firms reported that input costs fell to a four-month low while selling prices rose at a slower pace. Businesses remained positive about future activity. Cost pressures stayed elevated historically, yet companies absorbed much of the increase, resulting in the softest rise in output charges since January.
Output growth benefited from solid demand, new client acquisitions and stronger order inflows. New business reached its highest level in six months, moving further from March’s slowdown. Export orders also increased, though at a slower rate than total sales and below the 2025 average. Gains came from markets including Australia, Canada, France, Germany, Hong Kong, Malaysia, the UAE and the UK.
HSBC chief India economist Pranjul Bhandari noted that business activity expanded on the back of rising new work, with external demand rebounding after April’s sharp drop. Lower input cost inflation eased pressure on selling prices.
Charge inflation cooled to a four-month low and aligned closely with its long-term average. Only five percent of surveyed firms raised fees, citing the pass-through of higher expenses.
Employment continued to grow at a solid pace, the second-fastest in nearly a year, although fewer than seven percent of respondents reported increased hiring.
Companies expressed optimism for the next 12 months, expecting favourable demand to support output, though confidence slipped to a three-month low and remained below trend.
Consumer services recorded the strongest gains in new orders and output among monitored sub-sectors and led in both input and output price increases.
The HSBC India Composite PMI, also published Wednesday, showed faster growth in private-sector sales and output. The composite output index rose to 59.3 in May from 58.2 in April. New orders increased at the quickest rate in six months, led by service providers, while input cost inflation eased but stayed above historical norms.
