The Indian services growth broadly steadied in May and was underpinned by healthy demand conditions, new client wins and greater staffing capacity, a monthly report said on Wednesday.
Illustration: Dominic Xavier/Rediff
The seasonally adjusted HSBC India Services PMI Business Activity Index was at 58.8 in May, marginally up from April’s 58.7 and signalled another sharp rate of expansion.
In the Purchasing Managers’ Index (PMI) parlance, a print above 50 means expansion, while a score below 50 denotes contraction.
“India registered a 58.8 services PMI in May 2025, broadly in line with the steady readings from recent months.
“Strong international demand continued to fuel services activity, as evidenced by the new export business index’s uptick from April,” said Pranjul Bhandari, chief India economist at HSBC.
As per the survey, new orders rose at a sharp pace largely driven by advertising, demand strength and repeat orders from existing clients.
Companies also observed a near-record improvement in international demand for their services during May with faster increases in new export orders recorded in Asia, Europe and North America in particular.
“To keep up with swelling demand, India’s service providers heavily increased staff recruitment.
“Indeed, the employment index rose to the highest reading ever recorded by this survey,” Bhandari said.
Almost 16 per cent of panel members reported higher payroll numbers, while 1 per cent indicated a fall.
“The resulting overall rate of job creation was the strongest in the history of the survey,” the survey said.
The increase in workforce numbers, coupled with overtime payments, added to firms’ cost burdens.
Some companies also cited greater outlays on cooking oil, material and meat.
Meanwhile, price gauges showed an intensification of input cost and output charge inflation, with rates of increase edging above their historical averages in each case.
There was a recovery in business sentiment during May and the upgraded forecasts stemmed from expectations that greater staffing capacity, expanded clientele and marketing initiatives will support activity growth in the year ahead.
Meanwhile, the HSBC India Composite PMI Output Index came in at 59.3 in May, down only marginally from 59.7 in April, signalling a further sharp upturn in aggregate activity.
The downward movement in the headline index reflected softer growth of factory production, as services activity rose at a quicker pace.
Ongoing improvements in demand for Indian goods and services led to survey-record increases in jobs across the two sectors.
Hence, aggregate employment expanded at an unprecedented pace.
The HSBC India Services PMI is compiled by S&P Global from responses to questionnaires sent to a panel of around 400 service sector companies.
The sectors covered include consumer (excluding retail), transport, information, communication, finance, insurance, real estate and business services.
