India’s Services Sector Expands Strongly In May; Job Creation Hits Record High

India’s services sector sustained strong growth in May, with firms reporting sharp increases in activity, hiring, and international demand.

The HSBC India Services PMI Business Activity Index rose slightly to 58.8 from 58.7 in April. A reading above 50 signals expansion, while one below indicates contraction.

Robust demand and effective advertising supported this expansion. Businesses cited repeat orders from loyal customers and a rise in new clients.

Export orders surged, especially from Asia, Europe, and North America.

International Demand Fuels Services Boom

Pranjul Bhandari, Chief India Economist at HSBC, said, “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.”

As demand grew, companies increased hiring at a record pace.

About 16 per cent of firms reported new recruitment, while only 1 per cent reported job cuts. This marked the strongest job creation rate in the survey’s history.

Cost Pressures Rise Amid Hiring Surge

The sharp hiring push, overtime payments, and rising input costs—especially for cooking oil, meat, and materials—pushed up cost pressures.

Output charge inflation rose slightly above the average level.

Despite the increased costs, business confidence improved. Firms expect growth in client numbers, better staffing, and targeted marketing to drive activity in the coming months.

Meanwhile, the HSBC India Composite PMI Output Index, which covers both manufacturing and services, stood at 59.3 in May, down from 59.7 in April.

The dip was due to softer factory output, despite strong growth in the services sector.

The S&P Global survey covered about 400 services sector firms, including those in finance, transport, communication, and real estate.

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