India Services Growth Accelerates To Six-Month High In May As New Orders Surge

India’s services sector expanded at its fastest pace in six months in May, driven by strong domestic demand, a rebound in export orders and a sharp rise in new business inflows, according to the latest HSBC PMI survey compiled by S&P Global.

The HSBC India Services PMI Business Activity Index rose to 59.8 in May , up from 58.8 in April, marking the strongest expansion since November 2025. A reading above 50 indicates growth, while below that signals contraction.

Growth was led by strong performance across IT services, e-commerce, freight, entertainment and digital solutions , with firms reporting sustained client wins and improved demand conditions. New business inflows increased at the fastest pace in six months, supporting higher output across the sector.

Export demand for Indian services also strengthened, recovering from a sharp slowdown in April. Although international orders remained below the 2025 average, firms reported gains from Australia, Canada, France, Germany, Hong Kong, Malaysia, the UAE and the United Kingdom. Survey respondents noted that global uncertainty and earlier geopolitical disruptions had weighed on external demand in previous months.

Employment continued to rise, with job creation described as solid and the second-fastest in nearly a year. However, hiring remained limited in breadth, as fewer than 7 per cent of firms reported increased staffing while most maintained stable headcounts. Backlogs of work stayed contained, indicating limited pressure on existing capacity.

On the cost front, input price inflation eased from recent highs even as firms continued to face higher costs for food, fuel, gas, labour and materials. This moderation helped ease overall pricing pressure in the sector.

As a result, selling price inflation softened to a four-month low, reflecting weaker pricing power despite strong demand. The trend suggests improved cost absorption across services firms.

Despite robust activity, business confidence slipped to a three-month low, with firms remaining cautiously optimistic about the outlook. Expectations for the year ahead stayed positive but below long-term averages.

The broader HSBC India Composite PMI Output Index rose to 59.3 in May from 58.2 in April, indicating continued expansion across the private sector. While services remained the main growth driver, manufacturing showed relatively softer momentum.